The Tech Scene: Applying '02 Lessons to Cash Management Today
Bills, Steve, American Banker
Commercial bankers are hoping this year will not be a repeat of 2002, when the dot-com bubble burst and the ensuing economic slump flattened revenue in cash management businesses.
There are plenty of parallels - the collapse of the housing bubble, a potential recession, and plunging interest rates that give corporate treasurers little incentive to use cash management to move balances in search of higher returns.
But executives from some of the major banking companies in the cash management business say that electronic tools, many of which were not available during the last cycle, are helping corporate customers transfer balances, keep track of their positions, and process incoming payments faster.
As a result, these tools could offset the factors that made 2002 to 2004 dark years for this business, executives say.
Julie Monaco, Citigroup Inc.'s head of global transaction services for North America, said a variety of electronic payment products and services that are common today were unavailable in 2002. Citi's TreasuryVision, for example, which was introduced in 2005, gives corporate treasurers a comprehensive view of positions, enables easy transfers between accounts in different countries, and minimizes costs for investing and borrowing. This kind of technology, which lowers cash management costs, can also encourage companies to consolidate their deposits with Citi, Ms. Monaco said.
Several other bankers agreed that electronic tools introduced over the past six years have dramatically changed the ways corporate customers are able to keep track of their money.
Keith Theisen, a senior vice president in Wells Fargo & Co.'s treasury management unit, said that services such as remote deposit and converting paper checks into automated clearing house transactions, neither of which were widely available in 2002, offer customers faster access to deposits, while online services can help them keep track of when payments settle.
The San Francisco company's Desktop Deposit service is "the hottest treasury management service we've introduced in many years," Mr. Theisen said, and its smart decisioning service, which can determine whether checks should be cleared as ACH payments or images, is also very popular.
A slowing economy could prompt more companies to sign up for electronic money management services, Mr. Theisen said. "We see this as an opportunity, not a challenge."
Craig Martin, a staff director at the Association for Financial Professionals, a …
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Publication information: Article title: The Tech Scene: Applying '02 Lessons to Cash Management Today. Contributors: Bills, Steve - Author. Magazine title: American Banker. Volume: 173. Issue: 70 Publication date: April 11, 2008. Page number: 1. © 2009 SourceMedia, Inc. COPYRIGHT 2008 Gale Group.
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