Published: October 01, 2011
Under the current economic climate, corporate treasurers are seeking to improve efficiencies and gain better visibility and control over their global cash positions, any time of the day, any place in the world. Increasingly, treasurers are also looking to automate transaction initiation to reduce costs, time and resources associated with it. More and more, they are looking to centralise their traditional treasury activities in one or just a few regional centres for bank account management, consolidation of information, liquidity management, payments/receivables execution and full integration with local or regional supply chain financing solutions. As they optimise the way internal and external payments are made, they try to make the best use of internal liquidity to reduce the need of external funding. The larger the company and the more countries it operates in, the more challenging it is. There are tax, regulatory, and security issues to consider amongst others that in many cases prevent them from achieving optimal structures.
Standardisation is a key word when trying to achieve all these aims. Not long ago, a regional treasurer had to make very large twists to come up with a solution that matched its needs in the different geographies where he was doing business. The primary mechanism for corporate-to-bank communication was host-to-host connectivity, different connections to each bank and all the different and odd formats with which they had to comply. Nowadays, different standards have come into place. As a response to this, the banking community increasingly adopted market standards and even allowed SWIFT access to non financial institutions. This means non-proprietary, multibank solutions that offer a secure channel for information exchange and transaction execution between large corporates and their partner banks.
Under this new offering, large multinationals can easily use different bank providers under the same standards, gaining operational efficiencies and flexibility to choose or change bank providers based on their cash management capabilities for the markets where they operate. Moreover, all these changes have also ‘perfected’ the way banks regard this business by focusing more and more on the financial services rather than competing in the way information exchange is set up with each particular client.
While one may still argue that corporates and banks will still need much space for customised protocols and formats, this is something that will be solved by adding flexibility to adapt standard solutions to the reality of each implementation. What is clear, though, is that the times of customer retention on the basis of the cost of change are over. Under the new paradigm, service quality, market positioning and product capabilities are the key elements to increase market penetration.
Santander’s approachSantander acknowledged this market trend some time ago and built the infrastructure to deliver these solutions in such a way that customers could benefit from a strong combination of local and global solutions. With the aim of becoming the provider of choice for cash management services in its core markets, in both Europe and the Americas, Santander’s leading presence brings competitive local services combined with strong global products by continuously developing and improving its technology. Continually anticipating and adapting changes in local banking practices, Santander has invested heavily in its global products through an ongoing improvement process to provide corporate client-flexible connectivity platforms, able to handle clients’ cash management needs with whatever degree of operational centralisation they require. We have recognised the importance of delivering top service and information quality to our large multinational clients, that take into account their specific requirements for straight-through processing and reconciliation.
Our extensive reach, via our branch networks, brings considerable value to our clients. The importance of this varies depending on the market and the sector where the corporate is doing business. Emerging markets and those sectors with extensive distribution channels clearly find much more value in it as they are looking for wide cash collections coverage, capacity to execute manual instructions or local payment instruments. This is key when delivering a comprehensive solution that may also facilitate their main centralisation objectives: to improve operational efficiency, enhance control and increase visibility.
In this regard, Santander’s strategic approach to cash management services is aligned with its fundamental competitive strength: combining strong local banks that have the widest product offering in each country, with delivering a regional cash management solution that meets the client’s needs. At Santander, we are focused on integrating multiple domestic services with global products to leverage our broad market experience for the benefit of our customers.
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