Evolving Corporate Banking Services: ASP Treasury Technology
Senior banking professionals face mounting challenges to satisfy the escalating needs of existing clients while meeting the demands of sustainable growth and new client acquisition. Today’s dynamic banking landscape requires strategic vision and rapid responsiveness to ever-changing technologies and their impact on banking services, corporate business development and expansion, and the metamorphosis of the financial organisations themselves stemming from increasing market consolidation.
Corporate financial managers are tackling a host of challenges as well, such as: regulatory demands, increased scrutiny of business operations, effective management of growth, and various performance pressures. The recent credit market issues have only ‘added fuel to the fire’ for all. In many cases, corporations turn to their trusted financial colleagues at banks for support.
When the aforementioned concerns are examined along with the effect rapid globalisation has on corporate operations, one tactic remains clear: aggressive cash management locally/globally has a significant influence on corporate performance.
Global economic expansion and subsequent improvements in operational efficiencies continue to accelerate the speed at which companies explore new markets and exploit new revenue opportunities… all the while analysing economies of scale.
The volume and scale of global expansion among North American-based companies continues to accelerate rapidly. Most significant is the expansion at the ‘middle-market’ corporate level as these organisations are more often branching out into new territories where there is fresh demand for their distinctive goods and services. Large corporates, already having more of an international presence, are looking to increase their global footprint and penetrate existing channels more intensely.
In either scenario, a multi-banking solution is critical. The ability for the corporate treasury or finance manager to easily capture and analyse data from all banking partners globally is in high-demand and vital to a multitude of decisions required on a daily basis, as well as the strategic planning of the future. Visibility of financial data enterprise-wide and the consolidation of ‘mission-critical’ information need to be achieved in a timely and accurate fashion. The result: better, more accurate decisions are made faster. Yet, delivering these capabilities remains a considerable challenge for many banks that do not have a global presence.
Enter the Internet-based cash and treasury workstation; i.e. application service provider (ASP). Offered through a bank’s web portal, corporate customers access their global cash positions, balances, and transactions, often in highly-configurable views and personalised reports and charts. A robust ASP cash management system will not just provide the bank data, but introduce significant functionality across a variety of treasury operations (payments, reconciliation, forecasting, etc.) and enable more control, standardisation of workflows, automation, and straight-through processing (STP) via integration with various other corporate systems (such as ERP). All while satisfying audit requirements and achieving efficient regulatory compliance.
As corporate needs expand beyond what many banks can currently offer, the relationship is jeopardised. Clients begin to look elsewhere for achieving satisfaction of their requirements. However, the functional breadth of a robust cash management portal, particularly the multi-banking component, will enable banks to retain the customers they would have otherwise lost to competitive banks offering more global solutions and presence. The existing customer can engage a global bank for the growing international needs, with the pertinent data automatically captured, consolidated, and presented through the portal of the existing bank, thereby preserving and strengthening the existing relationship.
Broadening the scope of cash management services through a web-based workstation not only contributes to improved relationship building, but creates several opportunities to further develop revenue. The expanded bank portal, by way of deploying a solution as described above, can be leveraged as follows:
A web-based cash management workstation will offer functional options through a service offering that can be tailored to meet the specific requirements of each bank. The functions most critically aligned to the existing client base (multi-bank reporting, forecasting, etc.) are selected from a menu of modules, with bank representatives determining the specific capabilities within each. Thus, the scalability of the web-based application will have a vast impact on the successful penetration into the target market. And when expansive service options become available, more ‘end-user’ scenarios are explored in which the penetration throughout each client is deeper. As more departments and more daily functions are managed via a solution offered through the bank portal, the likelihood of client retention and satisfaction increase.
An ASP relationship means outsourcing a vital process that businesses rely upon but don’t necessarily own. In the context of cash and treasury management, web-based ASP (software as a service) represents an innovative yet low-cost approach eliminating pricing barriers and/or technological limitations that previously restricted access to the best tools and best practices for many organisations.
The software application and the servers that run it are owned, operated, and maintained by the ASP, and the ASP employs the people needed to support it. The ASP offers the software to customers everywhere via the Internet, accessed by a web browser or a similar thin client application. In the context of a bank-portal deployed ASP, the tailored service application is offered directly through the bank’s portal and with all relevant branding and logos (white label). Fees for an ASP application are typically per use and charged periodically (per month, quarter, etc.).
The advantages of ASP-deployed software are significant and require an exclusive discussion. To summarise, however, upfront capital expenditures (i.e. license fees) are eliminated, as are hardware costs, no internal IT support is required, implementation is expedited and costs reduced, disaster recovery procedures are inherent, and all upgrades are fully managed by the ASP.
The aforementioned service expansion strategy cannot be achieved with older technologies (i.e. client-server architecture). These applications are much too costly and require considerable resources to implement and maintain. ERP solutions are either much too fragmented in their delivery of this niche functionality, or, are sub-par in functional capability. The momentous trend to ASP technology for vendors delivering corporate solutions transcends to those offered by financial institutions, which were the early adopters of this develop and deploy model.
Bank management can therefore leverage proven ASP applications available in the market and ‘purchase’ the research and development already expended by the vendor, essentially enabling a turnkey approach to a major services expansion. Client retention, expansion and revenue generation is therefore expedited.
Implementing a project of this nature requires extensive planning and strategy sessions across many departments as you would expect. However, there are several key factors contributing to the foundation for success:
Senior management mandate: The clear message and ‘tone from the top’ will greatly influence the success of the project. The goals, objectives, and action plans for all participants must be explicitly defined, periodically measured, and continuously evaluated. This is a compulsory component of the greater strategy.
Reputable solutions provider: The partner you choose should have a strong client base and demonstrated growth; the system and technology both proven in the global market place. The depth of functionality available is vital to how the bank’s offering will develop, as is the scalability and configurability of the application. The R&D resources of the provider will directly impact the growth and enhancements offered through the application
System security: The ASP application should be deployed and accessed in a secure manner mirroring banking standards, and the environment in which the application is hosted must be equally secure.
Equip and motivate the sales force: Training the sales team on the application and how to position and sell the value proposition directly impacts performance, as does an aggressive yet achievable compensation structure.
Commitment of vendor: Directly related to the effectiveness of the sales force is the investment the vendor has in your success. A partnership approach is key, where the economic benefits of your ASP partner is tied directly to the bank’s success.
Know your target market: It’s neither likely nor realistic to try to be all things to all people. Better knowledge of your customers will maximise the returns upfront and increase client satisfaction. Thus, identify and quantify the needs at the target market segments and adjust the approach for each. The scalability of the application deployed is instrumental in how effective and successful the service offerings will be. Flexibility of the product offering supports consistency whereby the same core application is available to various target market segments, with some distinction in the modules offered.
Take a consultative approach for large-scale needs and refer projects of this nature directly to your ASP partner: Establishing a dynamic relationship fosters the collaborative environment; a clearly defined referral component, for example, is mutually beneficial to all parties. The portal sale at the small and middle-market segments will go much more rapidly as the core needs are immediately addressed: multi-banking, cash management/forecasting, and automation (GL, reconciliation).
Technology: not all ASP’s are created equal: The most capable and robust solutions available come from the most forward-thinking and dynamic service providers. And this begins with utilising the latest programming languages (Java, .NET, etc.) and technical architectures (i.e. multi-tier) with a certified development process enveloping the entire platform.
ASP cash and treasury management systems available today are at various levels of maturation, stability, and functional breadth, much like the service differentiators among banks. The momentous global expansion of the 21st century, combined with more recent technological advancements and acceptance of the Internet as a medium in which to conduct business, have converged to fuel the business demands and subsequent tools available to meet them. In this vein, real-time global cash and liquidity management and multi-bank visibility heavily influence daily and strategic business decisions, which directly impact corporate performance and ultimately the returns to the shareholder.
Having the vision and strategy on how best to harness and capitalise on the capabilities of systems currently available in the context of your target market can be the difference in your growth and how your institution is perceived and measured in the market.