April 20, 2006
Introduction: The Impact of Centralization on BCP and Bank Fees
Introduction: The Impact of Centralization on BCP and Bank Fees
In January 2006, more than 20 members of the Global Cash and Banking Group convened for the group’s 4th semi-annual meeting. Sponsored by ABN AMRO, the group discussed a range of issues including:
• Centralization of bank and treasury structures;
• Business Continuity Planning (BCP);
• Bank fee and statement analysis.
Yet as the discussion unfolded, a single, clear theme emerged: Both BCP and bank-fee analysis are strongly influenced by treasury’s continued effort to centralize bank account and organizational structure.
What members learned was that fewer and deeper bank relationships simplify the task of negotiating and monitoring bank fees across accounts and geographies; while that’s good in theory, in practice even a single bank is often unable to deliver a centralized, itemized billing statement outside the US.
Members also determined that as treasury packs more power into HQ and/or regional hubs, it gains greater visibility into key processes that might require a backup. At the same time, centralization further concentrates treasury’s operational risk exposures.
Both trends are only going to become more pronounced, as treasury continues to centralize: “Centralization is addictive,” noted one GCBG member. “The more you have it, the more of it you want.” As a result:
1) Treasury will be undergoing pressure to firm up its BCP framework; and
2) Treasury will put its banks under even greater pressure to report fees on a global and standardized basis so as to avoid any surprises and view the relationship as a whole.
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