Corporates are increasingly looking to banks for guidance on financing and business performance as well as optimising cash and treasury management.
A recent report by Coalition Greenwich (As Challenges Mount, Corporates Seek Enhanced Support from their Banks) concluded that large companies in Europe and Asia are more likely to ask their banks for advisory services, enhanced customer service and other forms of practical support.
In Europe, the share of large companies citing ‘advice and insights’ as an important factor in their selection of a cash management provider jumped nearly ten percentage points from 2021 to 2022, while the share of Asian corporates citing the provision of useful advice as a top criterion in selecting corporate banking partners showed a similar increase over the same period.
Global transport and logistics company DSV invested early in establishing a global treasury centre as well as an in-house bank responsible for all inter-company payments. By emphasising speed and scalability in its treasury systems, DSV believes it has streamlined its ability to integrate new acquisitions as well as implement enterprise-wide initiatives with buy-in from local teams.
DSV and HSBC have worked together to integrate the firm’s treasury systems and deploy APIs to a wide range of markets, enabling real-time data collection.
“We needed a reliable banking partner that could help us scale our treasury activities,” says Theis Jensen, Group Treasurer and Head of Group Treasury & Credit. “HSBC’s global network and deep experience in cash management has been a huge value-add.”
Bank treasury advisory services can help corporates solve a wide array of complex global challenges according to Tahreem Kampton, Global Head of Advisory at J.P. Morgan payments.
“These include treasury transformation through in-house banks, payment factories and other liquidity and working capital management solutions, and selection and implementation of treasury technology, as well as integration of acquisitions, preparation for spin-offs, development of direct/e-commerce channels (including marketplaces), and preparation for international expansion,” he says.
“Additionally, strategic partnerships with fintech players have enabled banks to offer cutting edge technology at scale, allowing organisations to build new ecosystems across industries with faster implementation and lower development burden,” says Kampton
Ray Suvrodeep, Global Head of Deposit & Investments Product Management, Global Payments Solutions at HSBC says banks with dedicated cash management teams can help corporate treasurers analyse the key challenges they face, review current processes, and identify potential areas of efficiency as well as manage liquidity to optimise cash.
“We support corporate customers to improve their business performance in a number of ways, for example with self-funding liquidity solutions to optimise working capital requirements and costs,” he adds. “Banks can provide digital tools to help corporates with enhanced visibility of their cash and make cash flow forecasting processes more accurate and efficient.”
Gaurav Arora, co-author of the Coalition Greenwich report, suggests that since technology has become the core delivery mechanism for many bank services, companies are now asking for digital implementation support to help them leverage the benefits of innovative product offerings, enhanced digital platforms and automated execution of transactions.
The choice of model for implementation support depends on the complexity and scale of a project as well as the capacity and capability of a client’s internal resources, says Suvrodeep.
“For very large transformations involving treasury system changes and integration, clients do and can opt for third-party resources,” he adds. “However, this isn’t the case for most implementations of bank provided solutions.”
Banks can offer vendor neutral advisory, helping organisations identify the right tools and systems for their future treasury suggests Kampton.
“Engaging banking partners for digital implementation support ensures selected vendors and system modules integrate seamlessly with banks and have the capability to work with value-added services such as cash forecasting, automated connectivity and centralised bank administration, while receiving end-to-end solution and implementation support,” he adds.
Banks are uniquely positioned to offer tailored digital solutions by blending their financial services expertise with proprietary digital tools and platforms. That is the view of James Tan, Regional Head of Corporate Advisory Group at DBS, who also suggests that derivative and FX contracts are best provided by banks with large and sophisticated dealing rooms, specialised traders and structurers.
“With increased geopolitical worries and its implications on supply chains, clients need more counterparties with access to both Asian and Western markets,” he concludes.
