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Corporate treasury always want tailor made solutions, but is it possible? realistic?

According to a new survey, Corporate Treasury Insights 2016*, published last week by BNP Paribas and The Boston Consulting Group (BCG), corporate treasurers have huge expectations of their transaction banking partners, they want them to:

  • serve as a leading aggregator for the entire treasury ecosystem
  • use their IT capabilities to provide efficient and personalised service
  • offer superior risk management and advisory capabilities
  • tailor big-data analytics and digital capabilities to improve the overall treasury experience

Corporate treasurer’s concerns and needs

The 2016 Corporate Treasury Insights report revealed that corporate treasurers today are more concerned with ecosystems complexity, compliance and funding than they were last year:

Source & Copyright©2016 - BCG/BNP Paribas Corporate Treasury Insights survey 2015, 2016

Other findings included:

  • corporate treasurers are clearly looking for transaction banks to accompany them through their life cycle as trusted advisors providing a tailored and data-driven experience
  • when it comes to selecting a banking partner, service and price “trump” product
  • treasurers are less interested in product enhancements than they are in having their transaction banking partners deliver predictable, reliable solutions backed by excellent execution
  • service and pricing were the top selection criteria, for 60% and 70% of treasurers respectively, when choosing a transaction banking partner.
  • in transaction banking treasurers want:
    • platform independence and flexibility: they don’t want to be tied to a single platform. 60% of treasurers view the ideal tool as fully bank-independent
    • a consolidated view of their liquidity and financial position with detailed reporting, and greater consistency across geographies are increasingly important
    • transaction banking platforms to aggregate areas such as cash management, trade, working capital management and foreign exchange hedging.

Conclusions

BCG and BNP Paribas conclusions based on the survey were that:

  • service models need to evolve:
    • mobile apps emerge as a channel in North American Large Caps. 
    • to manage their increasingly complex operating environment, treasurers expect their transaction banking partners to deliver comprehensive, easier-to-use platforms along with personalized service and targeted, data-driven insights.
  • banks can differentiate by:
    • orchestrating the full treasury ecosystem: the use of open-architecture would allow banks to create a “one-stop-shop” in which third parties could contribute, with the bank playing a role of global coordinator. To this end, banks would need to standardize data and provide timely, customer-specific analyses.
    • provide efficient tailor-made service through channeled IT capabilities: banks need to provide treasurers with better visibility and traceability across geographies, standardized performance metrics, and more frequent and relevant communication.
    • offer superior risk management and advisory capabilities: many treasurers consider banks to be the gold standard when it comes to IT system quality, given the high security thresholds required for their own operations. More than a half of respondents said that banks are their preferred provider for traditional mitigation measures, such as transaction and network traffic monitoring mechanisms and staff training. In addition, 20% to 40% would consider using bank solutions for all their IT-based treasury needs. The booming preoccupation of cyber security – now seen as #1 risk by treasurers, at par with market or counterparty risk - is an area where banks are seen as most legitimate, with as many as 45% of treasurers considering banks as service providers.
    • improve the treasury experience with tailored analytics and digital capabilities: treasurers want banks to leverage on their data solutions to provide enhanced market intelligence, which would be especially valuable for large multinationals.

Jacques Levet, Head of Transaction Banking for Europe, Middle-East & Africa at BNP Paribas, believes that, “Banks should devise a true commercial offering around some of their core expertise, especially in areas like risk management and cyber security, in order to assist treasurers in the management of those same risks. Similarly, banks will need to be flexible and seek strategic partnerships with fintechs and other providers whenever relevant, i.e. choosing collaboration over internal developments when that ends up delivering more value to their client.” He summed this up by saying, “In delivering all this, I would like BNP Paribas to be remembered for bringing simplicity to cash and treasury management, and making life easier for corporate treasurers through the use of the new technologies.”

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* Corporate Treasury Insights 2016

Based on a proprietary cross-industry survey of 750 corporate treasurers and CFOs from organizations around the world with consolidated annual revenues of more than $500 million. The survey was conducted by Expand Research (a wholly owned subsidiary of BCG) for BNP Paribas and BCG. The study also included interviews with 25 corporate treasurers and CFOs from multinational organizations. 


CTMfile take: This report highlights some of the fundamental needs and drivers of the corporate treasury department today and raises several key issues. In their conclusions on how banks can differentiate, BNP Paribas are setting themselves a huge, almost impossible, agenda. But corporates are encouraging them to do this by forever asking for ever more customised solutions and personalized service at the same time as demanding lower charges. More clarity and commonsense are needed here: what do corporate treasury departments really want and are prepared to pay for? and, what should the transaction banks sensibly and sustainably offer?


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Cash & Liquidity Management
Cash & Liquidity Management in Europe
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