Companies Rethink Their Transaction Banking Partnerships, gtnews Survey Shows

Five years after the start of the financial crisis, many
corporate treasury departments are still feeling its reverberations, causing treasurers
and their staff to re-evaluate transaction banking partners, according to a
survey report released by gtnews,
the global financial information resource.

Findings from
the gtnews
Transaction Banking Survey
, sponsored by CGI, show that while many metrics
for evaluating transaction banking partners are durable over time, the
financial crisis did cause some corporate treasury departments to manage bank
relationships differently, including looking at different metrics or products
in the bank relationship mix. 

The number of
bank relationships is in a state of flux, with most organisations now using
between two and five banking partners, creating intense industry competition. Almost
no one surveyed was willing to concentrate their business with a single
financial institution.

In the
post-crisis environment, satisfaction with corporate banking partners has
become decidedly mixed, the survey found, with 
two-thirds of corporate practitioners rating banking partners a ‘4’ or ‘5’
on a 5-point scale, and the remaining third less satisfied.  Levels of satisfaction are slightly higher
among organisations with annual revenues under $1 billion (USD).

Significantly, only
about half of Western European survey respondents rank their banking partners
highly, possibly reflecting the point in economic cycles across the region where
banking services providers are currently. 
In contrast, more than three-quarters of North American practitioner
respondents in the US and Canada rank their banking partners highly.

Beyond basic
payment services, banks are viewed sceptically by their clients, according to
the survey. While over half of corporate practitioners rate their banks highly
on payments services, fewer than half hold this view for any other service
category, with European corporates being the most critical.

Most organisations
rank quality of services provided as the most important criteria for selecting
a bank (98 percent), followed by stability of the financial institution (96
percent), availability of services such as credit (95 percent), and pricing (88
percent), technology (82 percent), and how well the bank understands the
organisation’s business (82 percent).

Western European
respondents are less likely than those from North America to rate a bank’s
understanding of their business as a top factor in selecting a bank (66 percent
versus 91 percent), suggesting that they place a greater value on their banks
getting service availability and quality right first.

Mobile banking
for corporate treasury, while an interesting concept, was ranked as an
important factor in selecting a bank by only 55 percent of respondents, likely
because there is little difference in mobile/online banking services from bank
to bank.

“When corporates
look to their bank partners, it’s the basics that are still most important of
all,” said Graham Buck, editor of gtnews.
“In an uneven economic recovery, good banking services and stability outweigh
the most forward-looking mobile app.”

Nevertheless,
technology does factor into the bank selection process.

“Technology
capability is now in the top five criteria for selecting a transaction bank
relationship.  The research results tell
us clearly how quickly the corporate market is driving single access across all
products on a near real time basis,” said Penny Hembrow, global head of banking
in CGI.  “The Banks need to be ready for
this shift.”

Download the
research on
gtnews.afponline.org/research

About gtnews (gtnews.afponline.org)
gtnews, part of the Association for
Financial Professionals, is the leading global knowledge resource for over
55,000 treasury, finance, payments and cash management readers. Under the
guidance of an advisory board of European and Asian treasurers, gtnews provides
weekly updates and an archive of over 8,500 articles, special reports,
commentaries, research, webinars, and whitepapers with a global focus. The
annual gtnews Awards for Global Corporate Treasury and Finance celebrate best
practice and industry-leading finance projects.

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