Opportunities for Banks as Corporates Continue to Shun Treasury Workstations

Albonetti & Co. recently released findings of a study in which it surveyed 200 corporates worldwide. It found, probably not surprisingly, that a good majority of companies do not use treasury workstations, the combination of hardware and applications that automate most core treasury processes.Over 200 U.S. and international corporations and organizations with revenue ranging from $50 million to over $10 billion participated in the 2007 Treasury Management Survey by the Cincinnati-based treasury management consultancy. The survey addressed the technology of treasury workstations and some of the key issues companies face as they consider using this technology.

The firm found that in despite an increase in interest in treasury workstation (TWS) technology, a majority of the companies surveyed (52 percent), do not use a treasury workstation. In addition, of those that do not currently use a treasury workstation, only 43 percent plan to purchase one in the near future. The highest percentage of TWS users are companies with revenue over $10 billion annually and 79 percent of them currently have one in place.

Of those that do not plan on putting a treasury workstation into service, 66 percent said they cannot convince senior management that they need a treasury workstation, 22 percent don't have time to analyze a bid for one, while only 10 percent felt a treasury workstation would be too costly. There's even a small percentage (2 percent) that said their IT department does not support purchasing a TWS.

This seems to indicate that there are some opportunities for banks to expand upon the treasury services they provide to corporates. It has long been evident that the treasury function in many businesses is often shunted to the bottom of the pile when it comes to IT upgrades. This study seems to reinforce the issue.

Corporates have gradually started farming out some of their treasury functions to their banks. Given the results of the Albonetti study, there will probably be far more opportunities for banks to expand this potentially lucrative service going forward. Of course, there are trust issues to overcome as banks try to convince their clients that this is the right thing to do. However, corporates' comfort with outsourcing these functions is growing. As the economy begins to slow and companies look to cut costs, it's pretty likely that treasury systems will remain last on the list of improvements at most businesses. And that's where the banks can jump in.

What do you think about the opportunities for banks with outsourced treasury services? Will this become the next revenue-generating strategy for FIs as they struggle to make money in this economy? Feel free to leave your comments below.