Banks are keeping corporates in the dark

Banks are keeping corporates in the dark

Banks are not good at communicating industry change to their corporate clients, according to a panel of senior industry representatives speaking at the IPS conference in London today.

“Banks need to listen to us,” said Martin Schlageter, head of treasury operations at Roche. “The world has changed. We need safety. We need to be sure about counterparty risk. We want banks to invest in cash management,  and we are expecting long-lasting partnerships where parties don’t step out easily.”

According to research published by KPMG and discussed by the panellists, only 5% of corporate treasurers currently consider that their banks are good at helping them to meet major industry changes. A further 7% reported that their bank only tells the customer what to do; 9% said that the bank expected the customer to work out the solution for themselves. Of the remainder, 20% said that the information the bank provides is confusing, with different parts of the bank saying different things, and the final 20% said that the bank does not provide very insightful information at all.

While the panellists considered that better, more insightful information from banks would help improve relationships with corporate treasurers, the most valued services banks provide to corporate treasurers are credit and liquidity services (16%), cash pooling and sweeping (10%), and balance and transaction reporting (8%), according to the KPMG survey. Panellists discussed the merits of switching banking partner, but reflected on the difficulty of establishing a relationship that worked both ways.

“Changing banking partner is a classic investment decision,” said James Lockyer, development director at the UK Association of Corporate Treasurers. “In addition to the traditional cost/benefit questions, trust has moved far up the agenda in the last five years. But at the same time, there’s a strong link between credit provision and ancillary services; often the reality is that if you can’t offer enough ancillary services to a lender, they won’t lend to you.”

Other demands aired by the panellists included greater standardisation of banking products between different geographic regions such as Asia Pacific, Latin America and Europe – a requirement that panellists felt was becoming increasingly necessary as businesses continue to diversify and become more global. The need for consistency was voiced by Ronald Mulder, director of ICL Finance BV, who pointed out that his firm currently has relationships with 16 core banks, making its operations more complex than ideally would be the case.

The added-value bank services most sought by corporates included ERP integration services (24%), transaction reporting services (18%), and format translation services (9%), according to the KPMG statistics.