Deutsche Bank has been progressing in leaps and bounds in cash management in the past three years, gaining stronger and stronger responses from customer surveys, particularly in Europe – where it’s the number one euro clearer with a market share of 28% in cross-border payments – but also increasingly in Asia and the US.
Recent high-profile mandates include being appointed by ABB for pan-European payments covering 16 countries, from General Motors and Deutsche Telekom for pan-European cash management. It has also won pan-Asian cash management mandates from KLM Royal Dutch Airline and from Bloomberg. And it has a growing number of US assignments mainly from financial clients.
For the moment it may still lag in the US corporate market, but there is a definite plan in place to fix this. Meanwhile what distinguishes Deutsche from other leading global banks, such as Citigroup and JPMorgan, is that the bank aims to reach a much broader range of customers including many more middle-size corporates and financial institutions.
“We have a large target market,” says Andrew England, head of product management at Deutsche Bank’s global cash management. “While other global banks might look to the top end of the corporate market, we’ll go all the way down to middle-tier companies.”
There’s a sound business reason for this. The common thread around Deutsche Bank is to target customers that are buying more than one banking product. That might seem to suggest larger customers. But Deutsche sees it another way. The reasoning runs that cash management and payments is a high-volume, low-margin game. The biggest companies – the chief target of many global banks – may provide high volume, but will also be highly selective in parcelling out ancillary business to many banks. Medium-size companies might be prepared to grant more of this other business to a core bank provider of a service like cash management.
That desire for added reach determines two other marked features that differentiate Deutsche in cash management: it’s somewhat decentralized structure and it’s heavy investment in internet technology.
England says: “Our aim is to be very strong in US and Europe, and to be very focused in Asia where business volumes are lower. Europe is a complex environment partly due to the fragmented payments infrastructure. One of the lessons we’ve learned in Europe is how important it is to have resources on the ground near the customers and that means not just in sales, but also implementation, service and even product development.”
It’s a lesson that’s being transferred to the US, where the bank is building bricks-and-mortar infrastructure, presently investing heavily in the southern states and the area around Chicago. The bank gained headway in America in transaction services when it bought Bankers Trust, though its franchise was strongest with American financial institutions and in dollar clearing.
Implementing cash management services for financial institutions is easier than for corporates as most banks are connected to the common system of Swift. England knows that building up among US corporates remains a priority. “We need to make significant progress not only in sales but also in building the processing platform. But those big investment are under way. Cash management will be the major contributor at the heart of the global transaction bank. We’re opening sales offices around the States and are reviewing options for broadening our processing coverage platform. Our time frames for the US are very aggressive.”
Deutsche Bank has also invested heavily in transferring cash management services onto the internet. Its projects cover payment initiation services (db-direct internet), reporting and information services (db-ais, db-cash reporter, db-CLSLink) and cutting-edge product developments such as netting (db-netting), electronic bill presentment and payment (db-eBills), online image and archiving services (db-image solutions), e-Commerce products for marketplaces (db-eTrustCard, db-eEscrow) and the provision of web-enabled investigation tools.
Other developments under way include a global infrastructure to process corporates’ cross-regional payment business in multiple currencies and formats through a single link into the local region (db-worldPAS), a corporate card product to support corporates’ re-engineering of travel and entertainment expenditure and purchasing. The bank is a founding member of Identrus.
England says: “As an industry we need to get off Windows technology. If you’ve got in excess of 3,000 platforms in Europe, Asia and America the task to upgrade and support the software is unmanageable. We need an easier delivery mechanism.” He adds: “I think other banks have really failed to deliver mainstream web access channels. There are very few out there. Our intention is to get all our customers onto the internet. It may take time for customers to get used to the new technology, but when they do, it gives them a great deal of power. Instead of ringing up the bank and asking where a payment is, the customer can do his own investigation and review that chain of processes. In the past, bill presentment, where many users might need access to information, was quite inefficient. Now we can offer much greater ease of access.”
