Where next for banking relationships?
For observers of the corporate banking market, the concept of straight-through payments processing throws up some interesting questions. Starting from asking what banks will do, it is relatively easy to move on to consider how banks will continue to earn money and end up asking what banks are for.
There is no doubt that the banking industry is continuing to evolve. Like any business, the bank that refuses to innovate and invest will be overtaken by its competition. Certainly, much has been written and will continue to be written about consolidation in the banking market.
Banks also have to think carefully about what services they deliver and what businesses they want to be in. How far can they add value to companies by moving along the financial supply chain? Can they afford to commit themselves to offering all the traditional banking services? Would services offered through partnerships deliver what their customers want? They need to think about how they interact with their customers, both retail and corporate. There is a growing trend to ‘white label’ payments services to other banks.
As banks change, treasurers need to rethink their relationships with their own banks. Does the single point of contact for cash management services across Europe provide the treasurer with the best control over their liquidity? Does it matter that the bank relies on partners to provide some of the services it offers? Is it best to build relationships with these partners separately?
There are no right answers to these questions. Banks have to respond both to the needs of their customers and to the implications of technological change. Treasurers need to make sure that their interests are not forgotten as banks come to terms with the changing marketplace.