Covarius Research recently canvassed opinion from UK and European corporates to discover what they really think about their banks. I cannot claim that the research we undertook was exhaustive, nor that I interviewed hundreds of treasurers; however we did ask our client base – which numbers the dozens – what they thought about their banks. We got some great open and honest feedback which we are happy to share in this article.
As a treasury consulting company one of the things we do is provide advice to corporates on bank relationship management and so it is important to find out what our clients’ opinions are of these relationships.
Overall there was positivity towards the banks from corporates. The clients we spoke to want a good relationship with their bank(s) and will do what they can to make this work. Price is a driver – as we will see below – but it is only one factor in what is a complex buying decision.
There was a commonly-held view, however, that as no one bank is strong in everything – meaning there is a need to choose a few banks to cater fully for what corporate treasury requires. The point was made by several respondents that a number of the smaller banks have developed niche products and/or territories and this sets them apart from some of the so-called global players. In addition to this, these smaller players are more agile and responsive when it comes to client requests, which gives them a distinct advantage.
Good customer service
What emerged clearly from the survey is that good customer service is vital if a bank wants to retain business. Indeed, corporates are very keen for their banks to take a real interest in the client’s business, understand what they are looking for and make sure it is delivered. So the role of bank staff in the corporate/bank relationship is key to making it work.
“The role of the relationship manager (RM) and the back office staff is key to retaining our business,” commented one respondent on this issue. “We don’t want to have to constantly chase things so good bank internal communication is vital.” Another summed it up as follows: “Our banks need to be prompt in handling our day- to-day cash management issues. We need answers quickly.” This is a must-have if relationships are to survive.
Technology is key
Having good products is also a differentiator. Here again, corporates look to their banks to be innovative, but this expectation also comes with warning: corporates do not want to be guinea pigs for new products unless they have been well-tested. Without exception, respondents mentioned that they saw technology as a tool to improve efficiency but as they tend to have limited staff they lack time to become the testing ground for new banking products.
It was interesting to note that many of the smaller banks, which have created niche products, tended to score a higher positive rating in this area. It was seen that a number of these “smaller players” have developed specific products, which really fit the market in which they operate.
Other key considerations
Keeping abreast of market updates and regulatory changes was highlighted by a number of respondents as an area that differentiates banks from each other and one where the global banks came out on top. This is possibly because they have the resources behind them to provide the expertise. Increasingly, corporates expect their RM to provide this level of expertise or at least coordinate the gathering and delivery of the information. It was highlighted that with regulatory changes in particular corporates want their banks to tell them “What the issues are and how they will affect my treasury.”
This was always going to be a difficult subject but the main point that comes out of the research was that cash management pricing is still too variable between banks and that greater transparency is needed.
The point was made by a number of respondents that banks need to improve on their attitude to selling products. When further questioned it became evident that corporates dislike products being pushed on them; rather they want their banks to spend more time understanding their specific requirements and then providing the expertise and products to fit them. It goes back to the point on relationship management – “get to know your client before you sell.”
Indeed, as one treasurer pointed out: “It is surprising that not all bank sales people are aware of how much information about our company and banking needs there is in our reports, press releases, web-sites and – of course – their own call notes.”
Corporate treasuries dislike documentation, particularly when they regard it as inefficient and time-consuming. In particular, documentation around the know-your-customer (KYC) regime was regularly mentioned as becoming more stringent and onerous.
As an aside it is interesting to note that some fintech companies are seeing this area as an opportunity and new products are being developed to cater for this; one example being the software applications developed by Pegasystems.
The main findings of the research can be summed up as follows:
- Corporate treasurers want their banks to understand their business better, but banks need to improve at this.
- Smaller banks that have created niche services or products can compete very well with their larger competitors.
- Treasurers see technology as simply a tool to make them more efficient and banks need to understand this and develop appropriate products.
- As treasuries become smaller in size they are increasingly turning to their banks to provide market knowledge and the banks need to be able to provide this advice.
- Banks need to learn to sell, but not push.
We believe that this research is important and we found that our corporate base was more than happy to share their feelings with us. On this basis, Covaruis plans to extend the study further by including many more respondents and expanding the scope of the questions. By sharing this information with the banks we hope that they will react and change the way they work with their clients.
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