After years of building up their international banking businesses, many regional banks now offer middle-market clients the same suite of overseas financial services as competitors 10 times their size. Unfortunately for the regionals, most of those clients don't seem to believe it.
A report by the market research firm TNS Global shows that, at a time when overseas demand in the middle-market sector is poised to rocket, the nation's biggest banks are seen as better equipped, or just better, at handling such tasks as funds transfers, foreign exchange and trade finance. JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. led the field: Nearly half of the businesses surveyed said one of the three companies had the "best" capacity to handle such matters. Entities like SunTrust Banks Inc. and Comerica Inc. didn't even register.
"These are all standard products that a good portion of the multiregional banks should be able to offer," said TNS vice president Glenn Staada, noting that many respondents' did not have a compelling reason for believing big banks would do better internationally. The results suggest that the regionals' main problem is a "perception versus reality thing," he said.
Combating the impression that they are too small to handle international tasks is crucial for regional banks given the survey's findings on the state of the international banking services market. About one in 10 companies expects to require a new international service or to change providers for its existing needs within the next year, double the average in previous years. They cited Asia and Latin America cited as the most common geographic focus.
The TNS data was based on interviews with 227 companies that have revenue of $3 million and $2 billion. Surprisingly, Staada said, companies with revenue of less than $20 million were just as likely to say they expected to need new international services as larger entities.
The survey provided some good news for American banks of all sizes, however. Few of the respondents thought that banks with overseas headquarters had any advantage over domestically headquartered institutions in providing international services. That, at least, means the regionals only have to "demonstrate the advantages of not going with one of the behemoths," he said.
"They're not at a disadvantage to the HSBCs of the world," Staada said. "The perception gap is on the size."