Cash & Liquidity Management

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From Cash Management Bank to Information Bank: Fulfilling a New Role in Cash and Liquidity Management Corporate approaches to cash and liquidity management are swiftly evolving. The authors look at how Barclays Corporate are positioning themselves to support the future cash management objectives of their clients.

From Cash Management Bank to Information Bank: Fulfilling a New Role in Cash and Liquidity Management

by Ravindra Madduri, Head of Payments and Cash Management Propositions and Mark Davies, Head of International Corporate Payments, Barclays Corporate

Since the financial crisis, increased globalisation, the emphasis on risk, liquidity and operational efficiency, and a transition from crisis management to strategies for growth, have all had a significant impact on corporate approaches to cash and liquidity management.

In this article, we look at some of the evolving requirements that we are helping our clients to address, and illustrate how we at Barclays Corporate are positioning ourselves to support the cash management objectives of our clients in the future.

Domestic, multi-domestic and international

As companies extend their horizons from domestic to international business, they need to optimise their cross-border payments and cash management activities, and simultaneously support domestic cash management in each of the locations in which they have a significant presence. Not only do they require international capabilities from their bank, they also need partners who have a direct presence, local expertise and experience in managing domestic payments, collections and cash management, often in multiple countries and regions.

In the years leading up to 2008, many corporate treasurers sought a single banking partner to accommodate their international and multi-domestic cash management requirements. In particular, they wanted to avoid the problems of different bank communication channels, integration formats and fragmentation of cash, that working with multiple banking partners can cause. This search typically proved unsuccessful; while a certain number of banks have an extensive global network, the depth of local knowledge and capabilities required in each market can be lacking. 

Since 2008, we have seen two key market developments. The first development is the realisation that working with a single, global cash management bank may compromise a company’s credit, concentration, liquidity and operational risk objectives. Secondly, developments in bank connectivity, integration standards and greater collaboration between banks mean that corporate treasurers can now achieve the same degree of standardisation and cohesion working with multiple banks as they originally sought by working with one. 

Consequently, treasurers are now more inclined to appoint regional or in-country banks that deliver best-in-class services in the relevant location, and put in place an overlay structure to enable cash centralisation.

From cash management bank to information bank

These developments have not only changed the way in which corporates construct their group of banking partners, but they have also impacted what they demand from their banks. With process and financial efficiency now primary objectives for treasurers, they are seeking timely, accurate and rich information from their banks to support real-time visibility over cash, across the world and with every bank. Consequently, appointing a single global cash management bank is no longer the primary objective for treasurers - they are seeking a global information bank that can consolidate information and provide it in a form that can be integrated easily with internal systems.

Barclays Corporate has emerged strongly as an information bank for corporates in our key markets in the UK, parts of Europe and Africa, but also in newer markets in which we are making a significant impact, such as India and Pakistan. For many years, we have recognised that the lack of standardisation in integration formats and multiple channels of communication create considerable challenges for corporates. Consequently, we pioneered many of the early developments in open standards, such as ISO 20022, and bank-independent connectivity such as SWIFT Corporate Access.

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