Banks Boost Revenue Streams With Transaction Management Services and Technologies

Card spending is volatile, and commercial real estate loans look shaky.

Rules on how much capital must be held on banks’ balance sheets are under continued debate.

For the largest, traditional players in financial services, some top-line momentum can be found in helping transform client firms’ operations with technologies and services, specifically through treasury and trade management.

Earlier this week, PYMNTS Intelligence unveiled its latest report on corporate treasury challenges and opportunities. It found that corporate workflows can, and should, benefit from everything from automated daily reconciliation across all bank accounts to advanced cash flow forecasting.

The role of the corporate treasurer has evolved to include risk management, Jim Scurlock, senior director and assistant treasurer at Expedia, and Larson McNeil, co-head of marketplaces and digital ecosystems at J.P. Morgan Payments, told PYMNTS in March.

“Treasurers need to be able to act quickly and need to be able to provide business insight around balances and exposures,” Scurlock noted.

“We’re getting engaged earlier,” Scurlock added, as he observed that there’s been a strong bond forged between the treasury and payments teams within Expedia and experts at J.P. Morgan Payments.

With an eye on the transactions themselves, he said, “as with any digital marketplace, many of our discussions today are about ‘how do we make that experience better for our end customers?’”

For J.P. Morgan Payments, while a business may have been previously only focused on helping move money from point A to point B and charging a fee, it is now, and increasingly so, said McNeil, “more about ‘how do we provide a set of value-added services?’”

Artificial intelligence is finding wide use among banks to help harness data and offer it in actionable insight to client firms. In illustration of the advantages, an AI-driven cash flow management tool from J.P. Morgan Chase helped some of the bank’s corporate customers slash manual work by almost 90% by automating the categorization and visualization of client payment flows.

Strategic Cash Flow Management Is a Challenge

The streamlining of all manner of cash-related activities is especially desirable in an age where interest rates are still lofty, and where companies are moving beyond their domestic markets to capture new opportunities abroad. Regulatory compliance can be a headwind to growth.

These enterprise clients are finding it useful to outsource at least some of these complexities to banking partners that have transaction and account-level detail into how best to navigate daily cash-in and cash-out activities — and long-term strategic goals.

The impact is borne out by results this past earnings season, as enterprise banking/trade and treasury management divisions posted solid growth.

Positive Momentum in Earnings Reports

Goldman Sachs’ earnings results showed that within its Platform Solutions segment, transaction banking revenues stood at $80 million in the first quarter, up 8% from last year and 10% from the fourth quarter.

That unit, according to the company, helps clients improve their own treasury departments. Solutions within the unit include liquidity management, virtual accounts and payments functions that improve workflows with real-time tracking.

In its most recent earnings results, Citigroup reported that revenues from its Treasury and Trade Solutions segment were up 5% year over year to $3.5 billion. The operations revolve around cash management and trade services, and finance corporate clients and financial services firms.