Banks Need To Play Catch-Up
Keeping up with corporates' increasingly sophisticated demands for more streamlined and well-integrated solutions is proving challenging.
Technology is central to the modern treasurer's toolkit. "When it comes to good risk management-whether that is regulatory, operational or market-related-technology is at the core of our discussions with clients," says
Where banking systems are concerned, there are plenty of areas where treasurers would like to see further developments. In research published last December, research and advisory firm
The report points out that, as well as fulfilling the needs of corporate treasurers, banks are increasingly having to factor in other members of the organization-including procurement, operations, marketing and IT-and that failing to meet all these parties' demands can result in the loss of competitive advantage.
Where data is concerned, the report says, different corporate executives have requirements that go beyond the raw "data dumps" banks largely provide. "Banks are good at setting up multiple channels and accumulating data, but they are not very good at aggregating or analyzing the data they acquire over all those channels," comments
While some treasurers are looking for better analytics, others are more concerned about minimizing the complexity of bankto-corporate connectivity. "If you have to deal with dozens of bank groups on a global level, even if all such solutions are great, they are very different from one another," says
Diel says transparency could be improved with the creation of a bank core system whereby companies could view liquidity on all group accounts at the relevant bank or get an overview of derivative positions, including mark-to-market valuations. He adds, "The lack of such an integrated system is why annual confirmations by the banks for outstanding business with the corporate (which are required by auditors for the annual audit process) can sometimes take a long time to provide."
OBSTACLES TO INNOVATION
As large as fulfilling client expectations looms for banks, there are other factors to take into account when allocating budget. "Roughly 20% to 25% of bank spending globally is dedicated to new investments, such as putting in new software solutions," says
With other demands on banks' budgets, cash is not always available for innovation. A report published by
One critical cost is that of regulatory compliance. A report on corporate payment trends published in January by
On the other hand, compliance and innovation are not necessarily mutually exclusive.
Finally, while some treasurers are concerned about the impact of regulatory compliance on technology, others see communication between banks and corporations as a more pressing issue. "The main problem is that, to date, the banks have not shared much with us about their plans for dealing with the new regulations," says
"Although compliance with regulations is required, it certainly does have a material impact on the funds that are left over to spend on new investments."
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