Corporates call for banks to beef up tech advisory
Corporates need more assistance from their banking partners with on-boarding technology services such as Swift messaging, treasurers tell Euromoney.
Companies looking to improve their operational efficiency are finding their technology services are as vital in the process as their banking partners.
For smaller corporates, the implementation of an IT platform is an expensive and time-consuming process. With many options available and little experience in knowing which systems to choose, it is a daunting process. From the corporate perspective, it is essential to have the cooperation of their experienced banking partners.
Speaking to Euromoney at Fundtech’s Insights EMEA event in London, Christopher Donohoe, assistant treasurer at Ireland-based industrial company Ingersoll Rand, explains the challenge: “We see banks often coming to us with rigid off-the-shelf products that will not necessarily work in a complex operational environment.”
For example, many corporates are seeking to use Swift’s messaging services, but are struggling to find the assistance they need from their banking partners.
Kerry Saunders, Constellium
Kerry Saunders, treasury IT lead and business partner for Zurich site at Constellium, an aluminium producer for the automotive, aerospace and packaging industries, says there is a responsibility on the side of the bank to ensure their clients are being supported in selecting and installing such technology.
Constellium, founded in 2011 after the sell-off by Rio Tinto, and with profits of €3.7 billion in 2014, has implemented Swift.
“The process of implementing Swift should be seen as a commodity service, and corporates should expect banks to come to them and help them through the process,” says Saunders.
Swift’s messaging platforms standardize the process of financial messages being passed between the corporate and its banks. They can be plugged into the existing systems and enables messages to be sent globally.
Corporate treasurers need to be convinced of the benefits of implementing IT, especially when it comes at an additional cost and does not yield immediate benefits. Saunders says companies do not necessarily have the experience to adopt systems such as Swift, and banks should find ways of engaging them in the process.
There is an issue of conflicting interests. Some financial institutions push their proprietary software, often a competitor to Swift, which can only be used with that individual bank. This is restrictive for a corporate working across multiple countries and several banking partners, as these platforms are not easily interconnected.
Constellium's Saunders explains: “Sometimes there is the feeling that the bank is on-boarding the corporate to Swift for the first time while others come with a standard approach and process. Corporates typically won’t have the experience to use Swift and would look to their banks to bring that specialist knowledge to the table.”
In an increasingly competitive banking landscape, corporates are finding they can be more selective over their banking partners, and adopting platforms such as Swift is further boosting their leverage. They are freer to move to another bank, without material disruption to their operations.
Corporate treasurers need strong, well-capitalized banks
Christopher Donohoe, Ingersoll Rand
In the current climate, banks need to offer a unique and tailored service to their customers.
“One of the reasons that corporates use Swift is that it is bank agnostic and allows them to switch their banks more easily as there is not the investment needed in host-to-host connections, for example,” says Saunders.
The on-boarding of Swift is bringing about the standardization of messaging formats. This development boosts the streamlining and centralizing of corporate operations, in turn, providing a granular overview of their operations.
Ingersoll Rand's Donohoe says: “Technology developments are key to transactional efficiencies. However, there is also a need for technical solutions to meet corporate requirements such as ease of connectivity as well as standardization in formatting of payments, statements, pricing and documentation.”
Saunders adds: “Banks could be looking at how to maintain their clients and perhaps focus on the potential of tapping data. This is especially the case for smaller corporates, who have not invested in payment factory solutions, for example.”
Donohoe concludes: “Overall, corporate treasurers need strong, well-capitalized banks with robust, hi-tech infrastructure, and bankers that can deliver transparent as well as strategic, proactive and relevant advice.”