Banks are stepping up their efforts to become corporate financial advisers rather than just places to store money, even if those efforts hurt fee and interest revenue.
At least two large banking companies introduced services this week to help companies consolidate information on their various accounts, both within the bank and at other financial services companies. Several others are promoting services that give treasurers more control over their corporate finances, so they can move funds on a daily basis into higher-interest accounts or pay down debt.
Bankers beat their drums for the new services this week at the annual convention of the Association for Financial Professionals, a trade group for corporate treasury executives, in San Antonio.
Citigroup Inc. and ABN Amro Holding NV’s LaSalle Bank Corp. are touting their financial aggregation services. Citi’s TreasuryVision uses its Internet portal, while LaSalle’s CashPro Accelerate downloads data into customized versions of Microsoft Corp.’s Excel spreadsheet application.
Both use the standardized extensible markup language to deliver uniform formatting for records from accounts at different banks. The goal is to give treasurers a daily snapshot of their positions, so they can decide what to do with their funds. However, neither tool can be used yet to actually move money around.
Paul S. Galant, the head of global cash management at Citigroup Corporate and Investment Banking, said that corporate customers have been asking for tools that give them this level of detail about their accounts. Customers also are feeling pressure to meet regulatory requirements.
TreasuryVision is an outgrowth of CitiVision, a business-intelligence application the company developed in 2000 for its investment bank. Citi began to adapt CitiVision 18 months ago to let global cash management customers aggregate financial information from around the world. Executives said they have received 10 orders from companies, three of which are using the service now.
Mr. Galant said the primary market for the service is Citi’s cash management client base, but it could bring new accounts to the company as well.
Historically, corporate treasurers have had to manage all their accounts themselves, and Mr. Galant said it is unusual for one banking company to monitor accounts at another.
“We’ve gone down an avenue here that is less traditional and more tied to the future state of financial institutions,” he said. “That is revolutionary for a bank, but we felt it was needed by the clients.”
Milton Santiago, a senior vice president at LaSalle and its head of electronic banking services, said its new service could save a corporate treasurer’s staff hours of work every day by automating the process of figuring out a company’s cash positions. “Once he or she has this, he’s not going to want to go anywhere else.”
The two bankers conceded that the new products could cost their companies some money. Corporate customers can use the information to find accounts with excess cash, and they could easily move funds around to avoid the need for short-term loans. If there is excess cash available after covering debts, it could be moved into short-term investments to generate a return.
Mr. Santiago acknowledged the potential risk to revenue, but he said, “We feel that the risk is outweighed by the value and our ability to create stickiness in the relationship.”
Fifteen companies are using CashPro Accelerate now and LaSalle plans to offer it to several thousand corporate customers, Mr. Santiago said. “This goes after a new audience.”
David C. Robertson, a partner at Treasury Strategies Inc., a Chicago consulting firm that serves banks and other large organizations, said the two applications will likely appeal to different market segments; Citi is aiming at the worldwide financial needs of the largest global companies, while LaSalle is focused more on midsize U.S. companies.
The traditional cash management business has been suffering from stagnating revenue, according to the accounting and consulting company Ernst & Young, which tracks this market.
But Mr. Robertson said some banks and vendors are trying to boost their sales. “They’ve come out of a cost-cutting phase, and they’re looking for new avenues of growth. People are looking to redefine their business.”
Several other companies promoted information-based products and services at the AFP conference.
JPMorgan Chase & Co. announced that it is offering Receivables Edge, which enables access to consolidated payment and remittance information from any of JPMorgan Chase’s 15 image-based payment processing locations, as well as its automated clearing house, wire transfer, and electronic data interchange systems.
U.S. Bancorp introduced U.S. Bank NOC Manager to manage the correction process for Notification of Change information. The service automatically updates outdated account, routing/transit, and transaction code information on behalf of the banks for customers.
And MasterCard International announced that it has started offering MasterCard Smart Data Real-Time Account Manager, an enhancement to its Smart Data reporting and expense management suite that lets financial administrators manage their accounts in real time.
