Seeking better visibility in an interconnected world
As globalization continues to connect businesses across jurisdictions, collaboration between different banks can greatly improve the life of treasury professionals
Consolidation and simplification are two key aspects driving the use of financial services. In a world where several apps undertake different actions, consumers are growing accustomed, at least within retail banking, to having a single portal view of their finances.
However, this may soon change when turning to corporate banking, specifically on transactions aspects surrounding cash management where visibility is key to making the right strategic decision.
With multinationals or large local corporates having to work with a mixture of international and local financial institutions, treasury professionals often have difficulty or are simply unable to monitor their cash positions from a single platform. As such some treasury professionals have opted to work with a selective group of banks resulting in an exit from existing arrangements.
This situation is indicated by recent research. According to a recent financial survey conducted by the Asset Benchmark Research (ABR), more companies are looking to work with fewer banks. Around 40% of those companies surveyed by ABR cooperated with only two or three banks in cash and working capital management. Only 19% of companies were currently working with more than five banks.
However, these moves to downsize banking from treasury professionals do not need to continue as long as banks within their remit decide to collaborate. One such positive instance occurred a few years ago when Deutsche Bank and Bank of China established a host-to-host connection resulting in German corporate, Bosch, not only being able to view their accounts held within both banks but also be able to execute transactions through bank agnostic procedures.
"With a single access to all of our bank accounts, we can further maximize the efficiencies gained from Deutsche Bank’s ERP integration solution,” says Christian Zeidler, head of corporate finance and regional treasury for APAC at Bosch.
While a breakthrough at the time, it highlighted the need for international banks to further integrate themselves with local banks to allow their clients a better view of their finances. This consideration is particularly important in China where large local corporates with global ambitions may have a number of onshore accounts spread across various banks in the country.
The bigger question these developments pose is whether more integrated multi-bank partnerships between international and local banks are on the horizon, enabling treasury professionals the much-prized goal of real-time visibility and better control.
Aside from direct collaboration between local and international banks, Swift offers its “Swift for Corporates” solution where treasury professionals can oversee transfers between member banks using the network’s standardized ISO and proprietary format messages.
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1 Mar 2019