Gathering Together and Scattering Abroad:
A New Season in Banking
by Helen Sanders, Editor
For man, autumn is a time of harvest, of gathering together
For nature, it is a time of sowing, of scattering abroad.
I chose this quote before the collapse of Lehman Bros and all that has happened since. My backdrop for the article was going to be the autumn which seems to have set in very early this year - in the UK at least (and for those who attended a very wet Sibos in Vienna). The conference season has also come around quickly again this year, the time for gathering new ideas, making new contacts and catching up with old friends. When I came back to a half-written article, a hurricane had stormed its way through the financial markets, so I thought I’d need to start again. That’s what you get for leaving things to the last minute!
However, when I looked through the quotes from our contributors and the thoughts we wanted to communicate, in fact everything still stood. While the markets and all their participants are going through changing and challenging times, the financial fundamentals remain the same - manage risk, optimise liquidity. Winners and losers will emerge over the coming months, amongst both banks and corporates. So how can treasury contribute to ensuring that the company is a winner?
The banking industry has been rocked by unprecedented turmoil in recent weeks after an already turbulent year. Politicians tell us we are entering a new era for banking in which new rules will apply. However, while investment banking will undoubtedly experience a makeover, most treasurers’ banking requirements relate primarily to credit and cash management which (in the case of cash management in particular) is more stable and less vulnerable to market fluctuations. So does this mean that corporate treasurers will see no change in the way that they work with their banking partners? I think we are already seeing substantial change, not as a short-term response to market conditions but as part of a gradual period of transformation over many months. As Catherine P. Bessant, President, Bank of America Global Product Solutions explains,
“What has made banks successful over the past ten years will be different in the next ten years. In particular, focusing on ‘product sell’ is not what corporates want. Furthermore, there will be less geographic centricity in banking services. Companies are being forced into thinking far more globally, which has been a real wake-up call to many companies in the United States. For example, we found that 87% of our US clients, even mid-market firms, will do at least one transaction which either starts or ends outside the US.”
Mikael Björknert, Head of Global Transaction Services, SEB agrees that there will be a greater focus on partnerships between the banks:
“Large global banks often find it difficult to really get to the heart of a client and fully appreciate their needs and aspirations. Regional banks with greater cultural appreciation and people with local experience in the market tend to find this easier. Consequently, we are increasingly finding that large banks are approaching us to leverage our customer relationships by providing global services in conjunction with the services we are already offering. This has clear advantages for our clients who can maintain their close relationship with SEB whilst benefiting from an even wider range of services globally.”
Most companies have been frustrated at some stage by banks showing a lack of understanding of their business, trying to sell products which do not have specific benefit or a ‘silo’ approach to banking across regions, so banks’ efforts to remedy these problems will be welcomed by many. This will require investment, however, and many regional and global banks are making a substantial commitment in changing the way in which they work with customers. Cathy Bessant, Bank of America continues,