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2012 Treasury Services Outlook

Banks' treasury services offerings are being shaped by corporate customers' demands for better controls, increased access to information, and improved transparency of payments and other transactions. What is the outlook for treasury services in 2012, and what technologies can help banks improve their offerings?

Efficiency Will Dominate the Treasury Services Landscape in 2012

By Cindy Murray, Head of Global Treasury Product Infrastructure, Platforms and eCommerce, Bank of America Merrill Lynch (Charlotte, N.C.)

Efficiency will continue to dominate the treasury services landscape in 2012 as corporate treasurers balance the need to contribute strategically to their organizations with constrained resources. Through industry standardization groups such as ISO 20022, companies will progress toward the use of standard formats, particularly in payments and reconciliation. More corporates will join financial institutions in using SWIFT as a communications channel and embrace the new standards. And efficiency measures established by the Fortune 500 will be adopted by middle-market and smaller companies in the push to do more with less.

As payments volumes --both domestic and cross-border -- increase, organizations will streamline their foreign-exchange processes. Meanwhile, banks will make significant progress toward providing real-time information to clients to be used for strategic objectives such as making credit decisions on receivables, shipping goods and reconciling cash immediately.

Efficiency also will be aided by both the online and file channels. On the file side, we'll see more traction around electronic bank account management (eBAM), as the power of standards and electronic communication with the banks takes root. Online channel progress will be notable with improvements in the handling of exceptions, research and self-service. Mobile also will become more established, with a focus on helping clients make decisions on the go.

Clients are also moving to utilize their banks to store more data. The amount of data stored will increase from about a year's worth to two to three years' worth to meet this demand. Think of it as the "bank as a cloud" service: It frees clients from DVD storage and puts more information at their fingertips.

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.

Expertise and Risk Management Are Key to Treasury Services Success

By Christopher Foskett, Managing Director, J.P. Morgan Treasury Services (New York)

Industry drivers such as regulatory reform, international expansion and the need to drive efficiencies are significantly impacting the way bank clients do business. Furthermore, market volatility due to the sovereign debt crisis in Europe is changing the landscape around liquidity and funding. Corporates and financial institutions alike are focusing on risk management and safety of investments. They also are learning to do more with less.

J.P. Morgan's strategy is to grow the global treasury services business by developing solutions for our clients to help them address these major changes and succeed in their target markets. We are extending our capabilities and services worldwide through a combination of expanding into strategic locations (such as Saudi Arabia, South Africa and additional branches in China) and growing our in-country capabilities, as well as working with local bank partners to extend our reach. Our focus is on technology-based solutions, delivering high levels of straight-through processing, visibility over cash globally and access to local markets through our global network. All of these services are designed to generate higher revenue, lower costs and deliver efficiencies for our clients. 

Our clients look for local knowledge and expertise as they expand globally, coupled with risk mitigation tools. As a global payments provider we make payments in 135 currencies and direct clear in 19 currencies. Our key differentiators include our advisory approach to improving working capital management and efficient treasury management, providing best-in-class and consistent services across our network, and reducing risk through our solid credit rating.

Treasury Services Offer Banks a Big Opportunity

By Marc Harrison, Consultant, Greenwich Associates (Stamford, Conn.)

Treasury services is a growing part of many banks' businesses. It's a fee-based business, so even if there's not a whole lot of lending activity going on, or a whole lot of capital markets activity, treasury management is a very attractive business to be in.

Coming out of the credit crisis, banks recognized that treasury services represented an important revenue stream. Treasury is a highly automated and technology-driven business, and banks continue to invest in portals and other technological enhancements to product delivery to meet corporations' specific needs.

Corporations say they need tools to be able to recognize their cash balances more quickly. In addition to visibility of cash, corporations are asking for the ability to seamlessly move money from Point A to Point B, which generally can be accomplished electronically. This means they're less reliant on paper for tasks such as payables.

Banks now are focusing on how they can seamlessly connect clients to different electronic channels. First is the host-to-host channel, enabling companies -- particularly large corporations -- to upload files without manual intervention. While this has traditionally been done through client/server environments with dedicated hardware, clients also want to have this ability using the web channel, so the electronic channel has grown in terms of importance. Corporations want to use the Internet platform from their banks as the single source of truth -- or the one place they'll go to first -- for a multitude of service-related tasks, such as investigating the status of an unpaid item.


Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio

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