2012 Treasury Services Outlook
Treasury Services Competition to Heat Up in 2012
By Steven W. Reiter, Managing VP; and Hugh Gallagher, VP, First Manhattan Consulting Group (New York)
Banks will continue to compete heavily in the treasury services space in 2012, driven by a desire for fee income as well as Basel III's favorable liquidity treatment of corporate deposits tied to treasury services relationships. Banks will increasingly differentiate product offerings based on their ability to streamline treasury services operations -- for example, by consolidating banking relationships.
Corporates want banks to provide three key capabilities beyond traditional payments and antifraud offerings: straight-through integration to internal accounting and enterprise resource planning (ERP) platforms, payments and other treasury services; simplified access and transaction origination through improved online and mobile capabilities; and multicurrency payments and liquidity management across platforms (e.g., SEPA, SWIFT, FED).
Banks that offer treasury management outsourcing and related software-as-a-service (SaaS) solutions will be well-positioned to market these capabilities. Building on recent improvements to online banking capabilities, over the next one to two years banks will further differentiate their offerings with more consistent integration across the commercial banking relationship, improved mobile banking functionality, streamlined payments operations and more competitive foreign exchange, industry vertical-oriented remittance processing (such as for healthcare), and alliances with ERP vendors to integrate treasury services with the corporate supply chain.
There are four technologies currently impacting treasury services: web services that facilitate integration to the corporate supply chain; payment hubs that consolidate siloed payments and infrastructure and enable straight-through processing; advanced mobile capabilities; and specialized ERP modules that facilitate bank integration.