There can never be too many banks
Treasurers have never had so many banks competing for their business. Indeed, a recent Bain & Company report has found that the transaction banking space is more saturated than ever. This comes as bank executives place their bets on the fee-based income gleaned from the business driving a new era of growth for their institutions.
At the same time, new entrants, in the form of niche technology companies, are emerging. These companies tackle specific business issues unsolved by the banks and promise treasurers a better user experience. Areas currently impacted include payments, supply chain finance and FX.
This is great news for treasurers. Increased investment and competition should manifest in improved products and services. It could also see costs reduce as banks use new technology to streamline operations and are forced into more transparent pricing models by fintech entrants. Indeed, Bain & Company predicts the correct application of blockchain could reduce trade finance operating costs by as much as 80%, for example, which should be passed onto the customer.
There are risks that may emerge, however. Bain & Company highlights that as the transaction banking space becomes more crowded and prices fall some banks may be negatively impacted. This may cause certain banks to retrench, or it may lead to a round of consolidation.
Treasurers must therefore continue to be vigilant when deciding who they do business with. This means avoiding the fintech marketing hype and selecting partners and solutions that will be there for the long term.
Treasury Today Asia explores the effect technology is having on financial services in more detail in this magazine. We cut through the noise and explore the macro impact it is having in reshaping financial services.
Elsewhere, we dismantle China’s Belt and Road project and ask what it will mean for corporations and their corporate treasury teams. We also take a tour around the region’s leading corporate treasury centres and find out how increased competition is creating opportunities for treasury departments looking to centralise.