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Refreshing Cash Management
Applications to Address New
Market Needs
An Oracle White Paper
December 2008
Refreshing Cash Management Applications
to Address New Market Needs
EXECUTIVE OVERVIEW
From receivables, to payables, to cash
forecasting, corporate treasurers are
becoming more involved within the
organization and, as a result, need more
information than ever before.
The global cash management industry continues to evolve, and banks are adopting
new strategies. These new strategies are being driven by new market conditions,
intense competition and more demanding customers. Today’s cash management
customers want consolidated balance information, real-time data, greater straightthrough processing, and new tools—such as forecasting tools—to more effectively
and efficiently manage their cash. Interestingly, as the industry becomes more
global, the trends as well as the product offerings are becoming more similar,
regardless of bank location.
This article, based on a research survey of 50 tier-one and tier-two banks around
the globe, describes how banks around the globe are refreshing their cash
management applications to better address new market needs.
CONSOLIDATED BALANCE INFORMATION
The role of the corporate treasurer is expanding and moving beyond simple
performing of transactions. Today, many corporate treasurers are finding that their
roles are becoming more strategic and analytical, and they are now responsible for
total liquidity management for their organizations. From receivables, to payables, to
cash forecasting, corporate treasurers are becoming more involved within the
organization and, as a result, need more information than ever before.
As they attempt to perform their new responsibilities, however, many are
challenged by a lack of consolidated information from unintegrated solutions,
manual processes, and a lack of forecasting tools. These treasurers now want and
need to have better information to more closely analyze data and lower their
company’s risk. In addition, many are now also demanding that their banks offer
multibanking capabilities whereby corporate treasurers can now log in to a single
online banking system and view balance information from multiple banks. This is
often made possible through bilateral agreements among banks, and information is
send via Society for Worldwide Interbank Financial Telecommunication (SWIFT)
messaging.
While corporations are increasingly demanding consolidated global information,
very few banks around the globe are currently able to offer it. However, a larger
Refreshing Cash Management Applications to Address New Market Needs
Page 2
percentage of banks plan to offer this capability over the next 24 months (see
Figure 1).
Q. On a scale of 1 (not at all likely) to 5 (extrem ely
likely), how likely, over the next 24 m onths, is your
institution to offer the ability to view consolidated
global subsidiary balance inform ation through a
single login?
43%
33%
33%
36%
33%
U.S.
29%
Canada
Currently Offer
Europe
29%
Asia-Pac
Very Likely to Definitely Likely (4 or 5)
Figure 1: Source: Aite Group
REAL-TIME INFORMATION
While real-time information was once a “nice-to-have,” increasingly it has become
something that cash management customers are demanding from their banks.
Banks around the globe vary in their abilities to offer it, however. While all
Canadian banks can offer real-time information, some U.S. and European banks
struggle to do so because of their reliance on data feeds, batch processing, and
often older, less integrated back-end systems (see Figure 2). While several banks can
offer to real-time information for accounts at their own institutions, the shared
information coming as a result of multibanking agreements and SWIFT is often
batch information.
Percentage of banks currently offering real-tim e data
100%
86%
60%
50%
U.S.
Canada
Europe
Asia-Pac
Figure 2: Source: Aite Group
Refreshing Cash Management Applications to Address New Market Needs
Page 3
GREATER STRAIGHT-THROUGH PROCESSING
Cash management customers, especially the largest ones, are trying to better
automate their own systems and operations and are increasingly demanding greater
straight-through processing from their banks. This requires tighter integration
between bank systems and customer enterprise resource planning (ERP) systems,
and improves accuracy and efficiency for customers. Still, providing the desired
level of integration can be challenging for banks, because of the various formats in
which the information comes. Different ERP solutions from global vendors also
exist. In addition, companies also often make their own customization to the
information and details, often creating the need for a company-by-company
customization on the part of the banks. Offering greater straight-through
processing is the goal of many banks, but it is not an easy one to achieve.
FORECASTING TOOLS
Some banks feel very strongly that
forecasting is not the responsibility of the
bank, and believe most customers would
prefer to find their own tools, or use tools
incorporated into their treasury
workstations. Others see it as a possible
revenue generator and another addedvalue service they can offer to customers.
Forecasting has become a key component in cash management in recent years and
an important part of the corporate treasurer’s role. A company cannot optimize its
use of cash and make excess liquidity available for use without determining how
and when cash will move across an organization. Despite its importance, as well as
the growing desire by corporate treasurers to improve their forecasting methods,
most companies lack the right tools to do this efficiently. In fact, forecasting is
currently one of their least efficient processes. Most companies today struggle to
get accurate forecasts because they use primitive applications as well as multiple
systems to manage their data. Many are challenged to bring together information
from multiple systems, spreadsheets and e-mail. Some large global organizations
have as many as 65 to 100 spreadsheets to manage their accounts around the world.
Research groups estimate that more than 50 percent of businesses rely primarily on
Microsoft Excel spreadsheets for some aspect of their cash forecasting and cash
positioning. While this software package is easy to use and can be sufficient for
small businesses that operate domestically, Excel spreadsheets are not sufficient for
larger corporations performing cross-border transactions. The question is whether
offering a forecasting tool is the job of the bank. As shown in Figure 3, very few
banks currently offer forecasting, and those that do offer very limited capabilities.
Some banks feel very strongly that forecasting is not the responsibility of the bank,
and believe most customers would prefer to find their own tools, or use tools
incorporated into their treasury workstations. Others see it as a possible revenue
generator and another added-value service they can offer to customers. They see it
as an important tool as they strive to take on more of an advisory role to their
customers, and as a way to differentiate themselves from competitors.
Refreshing Cash Management Applications to Address New Market Needs
Page 4
Q. On a scale of 1 (not at all likely) to 5 (definitely likely),
how likely is your organization, over the next 24
m onths, to offer cashflow forecasting tools?
43%
29%
27%
17%
13%
U.S.
Canada
Currently Offer
29%
14%
Europe
Asia-Pac
Very Likely to Definitely Likely (4 or 5)
Figure 3: Source: Aite Group
CONCLUSION
New market demands are resulting in banks depending on technology more than
ever before. Technology enables banks to quickly react to customer demands and
better serve them. It also helps to level the playing field and enables smaller banks
to better compete with the mega players. A greater dependence on technology is
also leading to a greater willingness by banks to deploy vendor-built solutions. As
the industry changes at a growing pace, it has become increasingly difficult for
banks to keep up on their own in addition to focusing on their own core
competencies.
Refreshing Cash Management Applications to Address New Market Needs
Page 5
Refreshing Cash Management Applications to Address New Market Needs
December 2008
Author: Christine Barry
Oracle Corporation
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500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
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