From global universal banks to regional aspirants, transaction services has become a core part of the post-crisis offering.
It’s a sticky, low-capital, decent-return business. It’s also a way to build relationships that pump other bank products and services through to clients, at a time when share of wallet is often the number one target for bank executives and a growing band of product-agnostic relationship managers.
But how successful have banks been in building a broader business around cash management?
Euromoney took the opportunity of its annual, industry-benchmark cash management survey to find out. With 23,000 corporates and 3,000 financial institutions taking part, it is by far the biggest study of the relationship between transaction services and other product areas carried out.
The results make for interesting reading. The relationship between cash and payments is clear, but it’s perhaps surprising that not more than 80% of corporates use their cash managers for payments. The relationship between FX and cash is almost as close – 70% of corporates globally use their cash partner for some of their FX trades.
The relationship between cash and lending needs some work – only 50% of corporates surveyed borrow from their transaction services partner. Risk management is also a low-returner, with just 15% of corporates using these services.
The most important lesson for banks, however, is that for all their talk of offering joined-up holistic solutions, their biggest clients are still dispensing their business more broadly then they would like. Companies with an annual turnover of more than $25 billion on average used a little more than three core products from their cash managers.
There’s work to be done. We’ll see if the results change next year.
Many banks now say cash management is the heart of their business, not just for the returns it can generate in its own right but also for the opportunity to pump other products and services through their networks. Euromoney’s survey reveals banks still have a lot of work to do to turn aspiration into reality