Cash & Liquidity Management

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Partnering for Innovation and Client Satisfaction Events over the past two years have seen banks stepping back and re-evaluating their strategy and investment priorities. Some have divided assets and shrunk their balance sheets, and most face the dilemma of how to satisfy the growing demands of their clients in an environment of constrained expenditure. Erik Zingmark looks at how recognition is growing in relation to the value of collaboration, and how a long-term banking relationship can mean more than product and service consistency.

Partnering for Innovation and Client Satisfaction

by Erik Zingmark, Head Global Transaction Services International, SEB Merchant Banking

Events over the past two years have seen banks stepping back and re-evaluating their strategy and investment priorities. Some have divested assets and shrunk their balance sheets, and most face the dilemma of how to satisfy the growing demands of their clients in an environment of constrained expenditure. In this climate, we have seen a growing willingness amongst banks to collaborate with each other and with other market players, such as technology vendors and standards bodies. This relatively new commitment to collaboration has brought a variety of advantages for banks’ corporate clients. For example, SWIFT Corporate Access and the development of XML-based financial messaging standards would not have been feasible if banks had not been prepared to work together and put aside competitive concerns.

Another outcome of the growing recognition of the value of collaboration is an evolution in the way that banks work together to leverage each other’s products, services or geographic presence to benefit their clients. Bank partnerships are not new, and are a well-established means by which banks with complementary services or regional coverage can provide an enhanced service to their clients. For example, the strategic alliance between SEB and ING has continued to flourish over a number of years, with cash management clients of both banks benefiting from our combined geographic reach and product depth. However, as the banking environment continues to evolve, we are likely to see new models for bank collaboration in the future.

We have seen a growing willingness amongst banks to collaborate with each other and with other market players, such as technology vendors and standards bodies.

Ensuring a long-term commitment

Although the partnership between banks is a familiar model, it can bring risks to clients. Over the past two years, we have witnessed a large number of announcements of new partnerships and alliances, but unless these have a clear commercial value for both organisations, and a demonstrable value proposition for clients, many of them are likely to be transitory or enjoy only short-term commitment from the relevant parties.

There are various key factors that contribute to the long-term success of a banking partnership. Firstly, it needs to be clear what the benefit of the partnership will be, and why the banks in question are best placed to deliver these benefits. This could involve complementary products, business cultures, skills and geographic coverage. Too much similarity means that the overlap, and therefore competitive stress, will be too great; too little, and the partnership will lack the closeness of fit that is required to deliver a cohesive service to clients. For example, in relation to SEB and ING, the two banks do not overlap geographically in providing cash management services, nor would either bank wish to replicate the services offered by the other. Instead, we can leverage the synergies between the organisations to deliver comprehensive services to clients.

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