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Banks Leaving Treasurers To Manage Cash Themselves


The corporate treasurer, especially for larger, multinational corporations, is now a strategic role within the enterprise. But the size and strength of corporate treasury departments has some analysts wondering why firms' banks aren't offering more in the way of treasury and cash management solutions for their clients, forcing companies to meet their own demand.

Such was the question posited by Darryl Proctor, product director of transaction banking at Temenos. He authored the forward of a new report by Temenos and tech researchers at Ovum to explore the role of the modern corporate treasurer in a global context.

For Temenos, the findings aimed to offer insight into how the banking software firm can serve its FI customers by understanding how those FIs are failing to meet the needs of their own corporate clients.

"The role of the corporate treasurer and the banking services they need to meet their responsibilities have changed fundamentally since the financial crisis," the report declared. "In the face of instability and uncertainty in most areas of the operating environment, treasurer needs have grown more quickly than the improvement in corporate banking services."

Treasurer sentiment provides one window into how banks are underserving their corporates.

Temenos and Ovum found that the largest challenges for the corporate treasurer today are a lack of access to real-time data and the continued reliance on manual processes. Only 13 percent of treasurers can see their firms' global cash positions in real time, the report said, and less than half said they can view more than half of their cash positions in real time.

Even with some visibility into those cash positions, the numbers don't always add up.

The report found that 35 percent of survey respondents said the accuracy of cash forecasting is a major challenge for them to adequately fulfill their responsibilities of cash and liquidity management, as well as to manage risk.

Further, the largest companies — which arguably need the most transparent and accurate cash management tools of all — say they are most burdened by manual processes. For treasurers operating at companies with $10 billion or greater in revenues, 39 percent said a major issue is the dependence on manual processes.

"Corporate treasurers face an increasingly complex and challenging operating environment, one that is creating a clear need for greater access to real-time account information and more sophisticated forecasting services," summarized Ovum Practice Leader for Financial Services Technology Kieran Hines. "At the same time, it is clear that treasurers are also looking for financial service partners who can deliver products and services tailored to the specific needs of their businesses."

Hines pointed to significant opportunity for FIs in this regard.

With 2017 approaching, the role of the corporate treasurer will be built on four pillars, according to the report: cash and liquidity management; risk, compliance and reporting; forecasting and analytics; and delivering operational efficiency.

But with international operations on the rise, these professionals are also looking at ways to excel at these four pillars on a global scale. More than one-third of treasurers said managing FX risk is a top priority for the year ahead (17 percent said it was their number one focus), while a quarter cited FX risk management as a top challenge.

But 2017 also brings with it the possibilities of new technologies, and corporate treasurers are paying attention. The research found a significant portion of treasurers interested in blockchain technology, specifically to reduce the risk of trading, which can increase across borders.

Regardless of how treasurers plan to address their top challenges for the year ahead, Temenos and Ovum concluded that those challenges are widespread, and banks may want to look at how they can service their corporate clients more adequately in these areas.

According to Proctor, FX pressures and tightened financial regulations are not only placing pressure on treasurers but are also making the process of managing liquidity across banking partners more complex.

"Many banks have tried to change the commercial terms around cash balances and notional pooling strategies, making this a more complex issue," he said in a statement announcing the research earlier this month. "The survey highlights that treasurers are facing real challenges and complexities in getting the cash position information they need to manage liquidity, a particular issue where there are multiple bank and other third-party relationships in play."

"Corporates want to address this issue over the next 18 months," he continued, "and unless banks are willing to support this requirement, there is a risk of attrition."



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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