Global Electronic Banking Falls Short, Businesses Say

By Marjanovic, Steven | American Banker, November 28, 1995 | Go to article overview

Global Electronic Banking Falls Short, Businesses Say


Marjanovic, Steven, American Banker


Commercial bank customers see lots of room for improvement in global electronic banking, a survey found.

Although many financial institutions received high grades for specific products or services, most fell short of providing a full range of electronic banking capabilities for international cash management, trade finance, and securities processing. Also, few banks could integrate treasury operations.

"This is kind of a disappointing report card from the bank's point of view," said John Laurino, a managing director with Westport Consulting, Westport, Conn., which conducted the survey with FGI Research Inc.

"International electronic banking is still more of a concept than a reality," said Susan Skerritt, a director of global cash management with Morgan Stanley & Co., New York.

The bank-sponsored survey, which polled 329 companies from 17 countries, suggested that commercial customers are loyal to their banks - 71% of respondents rely on either bank salespeople or bank mailings for electronic banking information.

However, that loyalty could be jeopardized if banks do not heed the calls for more comprehensive and integrated systems.

Mr. Laurino said the "dream electronic banking system" would let companies perform cash, trade, and securities processing from a single platform, but few banks have this cross-application ability.

The shortcomings are the result of "a combination of a lack of sophistication on the companies' part, the lack of availability of systems," Mr. Laurino said.

Ms. Skerritt, who is also secretary of the Treasury Management Association, Bethesda, Md., noted that the cost of integration is high because most wholesale banking operations are fragmented.

Mr. Laurino said large corporations depend on bank services for managing cash positions, moving surplus assets among disparate operations, and investing in short-term securities.

International cash management includes account maintenance, payment and collections, netting across corporate operations, pooling of assets, short term investments, and foreign exchange.

Securities processing is local and global custody, securities lending and clearing, and short-term paper issuance.

Trade finance includes import and export collections, and import and export letters of credit.

Within these areas, corporate treasurers were most disappointed with the limited possibilities of electronic banking.

For instance, corporations often must "go across systems, go manual, or go with paper to be able to move assets," said Mark T. Greene, managing director of FGI Research, Chapel Hill, N.C.

For example, even as cash managers pledge to improve the their computing systems, most are only taking existing capabilities and "dressing them up" with Windows, Mr. …

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