After the crash, here comes CASH: Why the world’s biggest banks want more from cash management
Cash management is a hugely attractive business for the banks that have ended up at the top of the consolidation pile, with earnings stability and high returns on equity. And despite reductions in activity because of such developments as the Single Euro Payments Area, new business is emerging in white-labelled products and financial supply chain management. Laurence Neville reports.
A STARKLY INEVITABLE feature of the global cash management industry is a steady consolidation of market share in the hands of a limited number of banks. Only large banks can now win global mandates. And only this select group of banks can handle the price compression that began in the US, has since spread to Europe, and is expected to accelerate following the introduction of the Single Euro Payment Area (Sepa), which will begin to be implemented from January 2008.
As corporates – even medium-sized companies – increasingly source from abroad, the demand for international cash management services is rising. At the same time, though, companies are seeking to reduce the number of bank relationships they have, so banks require market width – the ability to operate across a wide number of countries and markets. Similarly, the solutions required by corporates need scale in order to make them cost-effective.