Financial Insights Discusses the Significant Business Drivers Shaping the Future for Asia's Cash Management Industry

Banks need to help corporate customer segment, and explore strategis alliances to widen coverage

Singapore and Hong Kong, June 16th, 2008 – A recent publication by leading independent research and advisory firm Financial Insights, an IDC company, points to the growing realization that an expanded and sophisticated treasury and finance function can improve business processes, drive operational efficiencies and transparency, all of which are crucial for sustained business success. The report, entitled ‘Asia/Pacific Cash Management Review: Insights into Corporate Cash Management Today, (Doc#FIN212573)', states that the importance of cash management (CM) continues to expand steadily as corporates demand efficient international cash management that expands in tandem with their global development.

"In this report, we highlight significant business drivers shaping the future for Asia's CM industry," explains Li-May Chew, CFA, senior research manager for Financial Insights Asia/Pacific. Significant enablers affecting the dynamics for Asia's CM industry include increased trade flows and companies expanding cross-borders, growing commoditization of CM and banks reacting with more creative CM offerings, regulations compelling operational transparency and the establishment of centralized CM monitoring environments, and emphasis on improving liquidity management.

The report also explores the common CM techniques, and the existing barriers for corporates to efficient CM. On the latter, while corporates ideally want a singular view of all cash transactions and balances, they have to content with the need to balance power between corporate and regional treasuries, and retain domestic oversight of the treasury management function to preserve proximity to customers and suppliers.

With local corporates and financial institutions moving in search of new overseas opportunities, international banks are building and profiting from their CM networks into Asia. Key international CM players here in Asia include the likes of ABN AMRO, Citi, Deutsche Bank, HSBC and Standard Chartered, amongst others. Strategies are however, diverse, with the widest branch reach belonging to HSBC and Standard Chartered, while ABN AMRO prefers to tap into the resources of partner banks, as can be seen in Figure 1 with by far the largest combined regional branch coverage (their own plus partner banks). On how banks can convince corporates to outsource more of their treasury services and develop relationship with banking partners, Li-May points out that "banks would do well to assist corporates in identifying their barriers and specific weaknesses to efficient CM, be it in cash pooling, cash flow forecasting, or shortcomings within the purchase-to-payment or order-to-receipt cash cycle."

Additionally, they need to decide whether they are well-equipped to service large MNCs, or to focus solely on middle-market companies (where there are opportunities to facilitate investment and cross-border trade flows and assist local corporates expand internationally), and further need to explore strategic partnership and alliances to widen coverage and reach.

"To assist the banks towards that endeavor, treasury management vendors need to source for developing work with international banks, Offer integrated solutions to second- and third-tier banks, and help corporates' treasury division rationalize their business case for purchasing vendor cash flow forecasting tools," concludes Li-May. A succeeding Financial Insights report will dwell more in depth into the prospects for the packaged CM solutions market in Asia.

For more information on obtaining this report ‘Asia/Pacific Cash Management Review: Insights into Corporate Cash Management Today'’, Doc#FIN212573, June 2008) - please contact: sales@financial-insights.com.