A new survey reveals that despite indications some companies are using both global and local banks, global banks are still dominant.
Just as luck favors the bold, in global banking, regulations favor the big and bold. According to a new survey (password: gnbcoverage) from financial consultancy J&W Associates “neither the continuing financial crisis nor the increasing cost of compliance with new regulations” has stemmed the dominance of global network banks in the area of worldwide cash management.
According to anecdotal evidence gather by the NeuGroup, some companies have utilized local banks, particularly in Latin America. For instance, at a recent NeuGroup meeting of LatAm treasurers, members discussed the importance of striking a balance between relationships with global and local banks to service their needs in LatAm countries.
Nonetheless, for the most part, companies are relying more and more on solely global relationships. “As a result of their continuing investment in their cash and trade services,” the J&W survey reported, [global bank] domination of the cash management business worldwide seems to be increasing. They are taking business away from both the local and regional banks.”
And they are taking away business for the following reasons, the survey revealed:
- Safety. Corporates need to minimize counterparty risk and thus concentrate business with safer, more secure global banks.
- Better tech. Platforms and technologies often are more advanced than those of the smaller national and regional banks.
- Better standardization. Standardization of systems and process can be more easily achieved with a global network bank
- Repeat business. Companies using a global bank in a region will rarely switch to a new provider.
And who are the top banks when it comes to global network reach? According to the survey, Citi has the widest reach with “by far the greatest number of own branch countries,” while Standard Chartered retains its lead as the bank with the largest network combining branches in countries with electronically integrated and SLA partner banks.”