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Cash & Liquidity Management
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Innovation and Investment in a Post-Crisis Market

Over the past two years, the financial markets have been affected by uncertainty, instability and a lack of trust. We have seen the banking crisis spill into the so-called ‘real’ economy, with organisations of all types suffering the effects of declining consumer confidence. There have been positive outcomes of the crisis, however. Firstly, we see that cash management has been elevated as a discipline which is critical to the survival of the business. Secondly, in an environment where trust and certainty has been at a premium, some banking players have emerged strongly and proven themselves as reliable business partners committed to investing in their clients’ success.

Banking response to the crisis

At the peak of the crisis, we saw that many banks’ attention appeared to be distracted away from their customers and focused internally. Cash management providers were often forced to prioritise issues relating to mergers, write-offs and obtaining government support, which in many cases meant that they could not always sustain a commitment to their clients. In the case of banks headquartered outside Germany, those that had received government backing were obliged to rein in their international aspirations and focus mainly on their home markets. This withdrawal of resources has had an impact on their corporate clients, inevitably resulting in treasurers rethinking and reviewing their banking relationships with regard to both credit supply and cash management services. Consequently, many of these companies have sought an alternative provider that could demonstrate the resilience, long-term commitment and ongoing investment in products, services and geographic expansion that they required.

Treasurers’ new demands

While the economic signals seem to be improving, many corporates are still experiencing considerable difficulties. At the peak of the crisis, some industries suffered a fall in revenues of 50% and conditions are still far from ‘normal’ in pre-crisis terms, although it is becoming easier to do business. Corporate treasurers’ expectations and demands of their banking partners have changed irreversibly, however, in a variety of ways.

Core services

Treasurers increasingly recognise the importance of a reliable partner not only to supply credit but also to deliver services that facilitate the business, such as cash management and trade finance. Reversing the loss of trust that undoubtedly occurred during the crisis is a slow and cumbersome process. There is still nervousness in the market. Even commoditised services such as salary payments are now at the heart of treasury as the reputation risk is high should they not be delivered on time. Consequently, it is essential that a banking partner remains committed to delivering the highest level of efficiency, accuracy and security in its core processes to support its clients’ day-to-day requirements.