US corporates concentrating cash management business with valued advisors

US corporates concentrating cash management business with valued advisors

Relationship building is back in fashion for US cash management banks as corporate treasuries take technology and high value service delivery for granted, according to a survey conducted by Greenwich Associates.

Greenwich Associates says the research shows that companies are raising the stakes for the banks competing for their cash management business and are willing to handsomely reward valued providers.

According to the study, some large US companies are concentrating as much as 85% of their business with their top three cash management providers. Firms are also extending their commitments to cash management service providers by putting their business out to bid less frequently.

However, companies are now taking technology and high service delivery for granted and are looking for banks to provide further value through advice.

According to the study, companies award four times as much cash management business to banks with which they have advisory relationships than to non-advisor banks. In terms of wallet share, advisory banks can claim as much as 45% of a company's cash management business.

But banks are increasingly viewing the cash management business as a critical entry point to companies' 'total wallet' for financial services of all types.

David Fox, consultant at Greenwich Associates, says: "From the bank's perspective, cash management has become just one part of a 'share of wallet' strategy that stretches from cash and treasury management to credit and investment banking services.

"Only when a company's overall wallet seems sufficiently large or valuable will many banks commit a dedicated representative or other significant sales and service resources to the client relationship."

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