Post-Crisis, European Corporates Become More Selective
WASHINGTON, Oct. 1, 2013 /CNW/ - Five years after the start of the financial crisis, many corporate treasury departments are still feeling its reverberations, causing treasurers and their staff to re-evaluate transaction banking partners, according to a survey report released today by gtnews, the global financial information resource.
Findings from the gtnews Transaction Banking Survey, sponsored by CGI, show that while many metrics for evaluating transaction banking partners are durable over time, the financial crisis did cause some corporate treasury departments to manage bank relationships differently, including looking at different metrics or products in the bank relationship mix.
The number of bank relationships is in a state of flux, with most organisations now using between two and five banking partners, creating intense industry competition. Almost no one surveyed was willing to concentrate their business with a single financial institution.
In the post-crisis environment, satisfaction with corporate banking partners has become decidedly mixed, the survey found, with two-thirds of corporate practitioners rating banking partners a '4' or '5' on a 5-point scale, and the remaining third less satisfied. Levels of satisfaction are slightly higher among organisations with annual revenues under $1 billion (USD).
Significantly, only about half of Western European survey respondents rank their banking partners highly, possibly reflecting the point in economic cycles across the region where banking services providers are currently. In contrast, more than three-quarters of North American practitioner respondents in the US and Canada rank their banking partners highly.
Beyond basic payment services, banks are viewed sceptically by their clients, according to the survey. While over half of corporate practitioners rate their banks highly on payments services, fewer than half hold this view for any other service category, with European corporates being the most critical.
Most organisations rank quality of services provided as the most important criteria for selecting a bank (98 percent), followed by stability of the financial institution (96 percent), availability of services such as credit (95 percent), and pricing (88 percent), technology (82 percent), and how well the bank understands the organisation's business (82 percent).
Western European respondents are less likely than those from North America to rate a bank's understanding of their business as a top factor in selecting a bank (66 percent versus 91 percent), suggesting that they place a greater value on their banks getting service availability and quality right first.
Mobile banking for corporate treasury, while an interesting concept, was ranked as an important factor in selecting a bank by only 55 percent of respondents, likely because there is little difference in mobile/online banking services from bank to bank.
"When corporates look to their bank partners, it's the basics that are still most important of all," said Graham Buck, editor of gtnews. "In an uneven economic recovery, good banking services and stability outweigh the most forward-looking mobile app."
Nevertheless, technology does factor into the bank selection process.
"Technology capability is now in the top five criteria for selecting a transaction bank relationship. The research results tell us clearly how quickly the corporate market is driving single access across all products on a near real time basis," said Penny Hembrow, global head of banking in CGI. "The Banks need to be ready for this shift."
Download the research on www.gtnews.com/research
About gtnews (www.gtnews.com)
gtnews, part of the Association for Financial Professionals, is the leading global knowledge resource for over 55,000 treasury, finance, payments and cash management readers. Under the guidance of an advisory board of European and Asian treasurers, gtnews provides weekly updates and an archive of over 8,500 articles, special reports, commentaries, research, webinars, and whitepapers with a global focus. The annual gtnews Awards for Global Corporate Treasury and Finance celebrate best practice and industry-leading finance projects.
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