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Energising Corporate Banking in a New World

Catherine P. Bessant, President, Global Corporate Banking, Bank of America Merrill Lynch

Executive Interview with Helen Sanders, Editor

Cathy Bessant, previously head of Global Product Solutions, recently took on a new role of president of Global Corporate Banking, an integral part of the Global Corporate & Investment Banking business for Bank of America Merrill Lynch. Under Cathy’s leadership, this business will include both the Corporate Banking coverage officers as well as the product development and delivery capabilities that have most recently been part of Global Product Solutions. We were delighted to talk to Cathy following her new appointment, as she shares her thoughts on the present and future of corporate banking.

What changes in behaviour have you seen amongst your clients over the past 12 months?

The past 12 months have inevitably witnessed extensive changes. What will be interesting to see is the extent to which these changes are permanent. Two years ago, companies were consolidating their banking relationships. Today, the situation is very different, with treasurers seeking to achieve a balance between the efficiency of their banking and cash management structures on one side, and with diversification of counterparty risk on the other. Therefore, rather than consolidation, they are seeking to work with a group of trusted banking partners based on a business model that provides diversification, flexibility and convenience.

What does this mean in practice?

One example is SWIFT corporate access. An increasing number of companies are seeking to replace their proprietary platforms with SWIFT in order to communicate with their banking partners in a consistent, secure and robust way. In the past, there were frequently concerns that use of a bank-neutral connectivity channel would disintermediate the banks in their relationship with corporate customers. In reality, it is vitally important to support corporates’ efforts to facilitate standardised access, formats and business processes. While in the past treasurers saw competitive advantage in banks’ proprietary software, they are now keen to avoid a relationship with their banks where they are locked in, and want to make decisions on their choice of banking partners based on the quality and scope of services, rather than being tied to them with technology.

How has Bank of America responded to this shift in behaviour amongst corporate clients?

We have been delivering on a multi-year strategy to migrate to a consultative sales and client service approach. Since the financial crisis first hit, we have accelerated this programme to ensure that we have not only the products and geographic reach that our customers need, but also the skills and expertise that they are seeking to leverage our solutions in an optimal way for their business.

A major change for all banks is the increased focus on collaboration. The assumption has to be that a customer will be multi-banked. Consequently, the banks that will prove most successful are those that not only deliver the right capabilities in their own right, but can also make these capabilities available in a convenient way. This requires banks to work together closely to make it as easy as possible for their corporate customers to do business with them.

Corporate treasurers’ criteria for selecting their banking partners have changed in other ways too. In the past, treasurers issuing a request for proposal for payments would focus on issues such as cost and cut-off times. Today, they are looking more deeply into the capabilities that a potential banking partner could provide; for example:

• Transparency: where is cash, and is up-to-date information visible at all times?

• Access: can cash be consolidated and mobilised as soon as it is required?

• Control: is cash secure globally, and is information consistent and reliable?

• Deployment: can cash be deployed in investment solutions easily?

These requirements are resulting in different conversations between treasurers and their bankers. From my point of view, I see this is as a very welcome development, and a significant opportunity for good banks and good bankers. People who are most effective in this profession should want to be challenged and engaged intellectually in problem-solving with their clients. Changing needs, however, require a new profile of individual to support their clients. Developing a workforce that can engage with clients at a strategic level has been central to our strategy for a number of years, both developing our internal skills and recruiting people with a variety of expertise. This cannot be achieved overnight, but many of the benefits of a well-timed strategy that has extended over a long period are now coming to fruition.

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