The cash management conundrum
There are only two truly global, fully fledged cash management banks today, but the digital arms race in transaction services gives far more banks the opportunity to be world class.
The business of cash management is a conundrum. The new economy has broken down borders for companies. Few are constrained by their country of domicile as e-commerce grows.
If you make or sell a product, the chances are you can do one or both in multiple jurisdictions and therefore multiple currencies. Your cash management and supply-chain finance needs are complex and you require banking partners that can help you manage them. In some respects, therefore, transaction services have become the most global part of the banking industry.
And yet global cash management remains a business with very few global banks. And the fee pool remains steadfastly diluted. Whereas in areas such as capital markets and investment banking, or trading-based sectors such as FX or equities, market shares for the leading banks of 10% or more are commonplace, in cash management the share of global wallet for the biggest firms is less than 5%.
We have focused heavily on dealing with the pain points of our customers: easing the process of funds transfer, providing payment-tracking facilities and improving security - Diane Reyes, HSBC
Make no mistake that cash management is a good business to be in.