Sibos 2015 special edition
Questions of cash: 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.
Bank treasurers are trapped in a nightmare of never-ending regulatory challenges. From second-guessing capital treatment to understanding new rules on liquidity, their work is more important than ever to the overall health of the banks they serve. The one bright spot: at least funding markets are open to them.
The search for liquidity has driven many bank treasurers to explore greater diversification in their funding programmes.
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
If only winning a transaction services mandate were as simple as filling in the RFP document – though even that is getting ever more complex. Success requires a full understanding of the business you are trying to win, and the soft skills to make the relationship work. Plenty can go wrong along the way.
View the results of 27,000 survey responses from treasury professionals.
ISO 20022 has the potential to bring considerable benefits to regulators and regulated institutions, although the integration challenge should not be underestimated.
The number of countries with real-time payment systems continues to rise, raising the importance of addressing issues such as fraud detection and prevention, and collaboration.
While banks continue to devote a lot of resources to compliance activity, there are signs that this investment is having less of a negative impact on service innovation.
Limited transparency in securities flows has been a concern for some time. The challenge facing regulators is to address issues around ownership without affecting legitimate transactions.
Asia’s rapidly changing corporate sector is becoming increasingly advanced in how it runs its treasury operations.
The sector has some catching up to do to meet the growing demands of corporate treasurers, both regional and international, who want to expand across Latin America’s varied markets.
The North American banking and treasury market is highly evolved but technology offers many routes to further sophistication.
The Single Euro Payments Area prompted a wholesale change in how European banking operates and set a precedent for other regions on the possibilities open to them.