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‘One Treasurer’s Wish List’ for the good corporate treasury life

When you give a talk at the ACT’s Cash Management Conference entitled, ‘Treasurer’s wish list’, the speaker has the opportunity to drop themselves in the mire with their banks and suppliers because inevitably the list will include concerns about both. Phil John, EMEA Treasurer, at MARS Inc. in his talk managed to stay out of trouble, entertain (with some excellent jokes), and make some serious points using an approach in which, for each wish, he examined the nightmare, the dream and the challanges, see below, of each of his seven personal wishes.

Source & Copyright©2016 - MARS Incorporated

Wish 1. Simple pricing of bank products:

  • The nightmare: banks’ encyclopedic responses to RFPs, e.g. 60 pages terms and conditions document, that are crammed with bank specific language that is difficult to interpret, and don’t give full cost pricing including all  additional and total annual cost of the service proposed
  • The dream: the bank is simple personal and fair with clear, transparent, and comprehensive pricing giving the total annual cost of every part of the service
  • The challenges: inflexible bank pricing systems which they cannot change combined with banks’  fear of losing revenue if they don’t include absolutely everything involved; getting cash back when banks overcharge.

Wish 2: Digital Billing which works 

  • The nightmare: files of paper statements from banks, all using different standards which have to be copied into a spreadsheet to do the analytics
  • The dream: digital billing with ease of billing data aggregation as in the US with the EDI 822 format and the AFP defined pricing categories all arriving electronically, and the unploaded straight into a spreadsheet. Even better would be to have a simple SWIFT message as well. Also receiving standard bank confirmations at the end of the year in different standards and formats.
  • The challenges: Banks and corporate support for the same digital standards, AND the system investment required in both banks and corporates.

Wish 3: Banks stop differentiating their basic services that can be multi-bank

  • The nightmare: Banks use different formats for even standard SWIFT messages, e.g. MARS had to develop their own internal eBAM solution because there was no system that covered all their banks
  • The dream: Banks don’t aggregate their differences in the multi-bank solutions, instead they produce single multi-bank, user centric solutions that work, using common standards and which are cybersecure. They need to be like Bill Gates - who brought global standards, and Steve Jobs - who brought ease of use
  • The challenges: Again investment would be needed: corporates - some short term and banks - systems investment. Also banks would need to collaborate with each other much more.

Wish 4: Stop KYC systems killing the customer

  • The nightmare: John feels that KYC should stand for Kill Your Customer, and that, although KYC is a currently a nightmare for the banks and corporates, it doesn’t have to be. John’s story of trying to open a single bank account was horrific and so familiar, as was the request for all the signatories to go to Dubai. John believes that the banks collectively are: playing it too safe; using too many documents and too often insisting on paper documents; plus document creep is growing. Also corporate treasury departments are receiving duplicate requests, and there is no single view of a whole company. 
  • The dream: clarity from the outset, all documents digitalised, with a universal corporate profile on the company, and changes are only made once. John would like to have the single profile owned by the corporates (rather than by the banks) in which MARS gives access to the banks that need it combined with not sending paper documents. (MARS have made KYC a high weighted item in their bank score cards.)
  • The challenges: Having confidence in the security of the systems. Investing in systems to provide new solutions. Collaboration between banks and corporates is required -  John is going to ask his partner banks: “How can we help you to help us?”. 

Wish 5: Consistent Digital Country Summaries

  • The nightmare: Multiple sources, views, messages, interpretations and documents describing the conditions in each country covering, e.g. is netting allowed, pooling, etc. Banks don’t agree with each other, etc.
  • The dream: A single source, end of multiple interpretations on a country, etc.
  • The challenges: The differences in what corporates need and the nuances on tax, pooling, etc. For the banks: challenges in keeping data current, and the difficulties of tax and legal disclaimers.

Wish 6: Improving STP rates

  • The nightmare: Problems in achieving STP: banks having different systems that reject payments, and corporates have multiple systems - global, regional and local
  • The dream: Same standards and interfaces world-wide so can have STP for all payments and collections
  • The challenges: Corporates possibly need to have a single ERP across whole company, with consistent data, and cut-out exceptions in promotions, etc. While banks need to provide enriched data and use common standards.

Wish 7: Banks give advice not hard sell

  • The nightmare: The hard sell is making it difficult/impossible to understand what is available. It is killing relationships
  • The dream: Return to relationship where the quality of the relationship really makes a difference in which banks, “Sit down with us, listen and advise us whilst not knowing whether they would win the business.” John feels this is the real KYC.  (Those banks who listened and have given advice and support have won some of the largest deals MARS have given in the last decade.)
  • The challenges: For corporates: building relationships and sharing their needs. Banks: need to develop an advisory culture with long term relationships and with far less emphasis on sales targets.

CTMfile take:  These seven important wishes require corporates to be very demanding of their banks, but, as John pointed out, it also needs corporates to get involved in developing the new standards and processes that will make them happen. 

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