Your Banking Relationships May Be Hurting You

The bank-corporate relationship was a cornerstone of treasury. Built on trust, personal connections, and a handshake, these partnerships were often the default choice, regardless of cost or technological prowess. However, that traditional approach may now be a liability. In an era of rapid fintech innovation, increasing fee transparency, and a relentless pressure for efficiency, remaining loyal to a single bank or a small group of incumbents could be holding your treasury back. It’s time for a wake-up call: a data-driven reassessment of your banking relationships is no longer an option, but a critical step toward a modern, agile treasury.

The Hidden Costs of Comfort and Loyalty

While a long-standing bank relationship offers comfort, it can also come with hidden costs and missed opportunities:

1. Stagnant Technology: Many incumbent banks, burdened by legacy infrastructure, have been slow to adopt modern, API-driven payment rails or real-time cash visibility tools. Treasurers who are overly loyal to these partners may find themselves stuck on outdated technology, limiting their ability to automate processes, enhance data analytics, and improve operational efficiency.
2. Uncompetitive Pricing: Banking fees and credit spreads are subject to market dynamics. Treasurers who don’t regularly benchmark their banking partners may be paying uncompetitive prices for services that are available at a lower cost elsewhere.
3. Lack of Innovation: Fintechs and challenger banks are often at the forefront of financial innovation. They are building solutions for everything from supply chain finance to integrated payments. By focusing on a small group of incumbents, treasurers may be missing out on a wider ecosystem of solutions that could provide a real competitive advantage.
4. Operational Risk Concentration: Relying on a small number of banks for all services, from payments to credit, creates a concentration risk. As the recent regional banking crises have shown, the swift failure of a seemingly stable institution can leave a company exposed.

The Data-Driven Review

The modern treasurer’s approach to banking must be one of constant, data-driven review. This doesn’t mean abandoning all bank relationships, but rather treating them as strategic partnerships that must be continually earned.

1. Conduct a Full Service and Cost Audit:

   • Treasury must conduct a full audit of all banking services used and the fees paid. This includes not only credit lines and payment services but also bank account management, FX, and investment services. The goal is to identify a “true cost” of the relationship and benchmark it against the market.

2. Assess the Technology and Innovation Gap:

   • Look at the technology your banks are offering. Do they have modern APIs for real-time data? Do they offer integrated payment solutions? Are they investing in AI and other emerging technologies? If your bank’s technology is not aligned with your treasury’s digital goals, it may be time to look elsewhere.

3. Evaluate Concentration and Risk:

   • Review your banking relationships from a risk perspective. How concentrated is your liquidity? Do you have an adequate number of banks to manage a crisis? A diversified banking structure is now a core component of treasury resilience.

4. Engage with a Wider Ecosystem:

   • Treasurers must look beyond their traditional bank relationships and engage with a wider ecosystem of fintechs, challenger banks, and payments providers. This can be done through industry conferences, technology demos, and pilot projects. The goal is not to replace banks but to understand the full range of solutions available in the market.

From Loyalty to Value

The relationship between treasury and its banks will always be important. However, the nature of that relationship is changing. Treasurers must move from a place of blind loyalty to a data-driven, value-oriented approach. By actively auditing services, assessing technology, and diversifying their partnerships, treasurers can ensure their banking relationships are not just a comfortable habit, but a genuine source of value and a critical pillar of a modern, agile treasury.