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Commercial Banking

What banks can do to grow their treasury business

August 30, 2022 5-MINUTE READ

RESEARCH REPORT

In brief

  • Incumbent banks’ dominance in treasury management in the US is under threat from new competition and evolving customer expectations.
  • If banks continue to offer the same undifferentiated products as they do today, they may lose market share to nimble, customer-focused fintechs.
  • Banks that are more agile, however, are likely to increase revenues and grow their portfolios.
  • Accenture surveyed 302 US businesses cross-industry to explore the treasury management market and how banks can gain customers and grow revenue.

New competition and evolving customer expectations

Commercial banks in the US have enjoyed a prolonged era of record-breaking growth in commercial deposits. But that is changing fast as their customers respond to rising inflation and interest rates by shifting deposits to higher-return-bearing instruments. In this environment, commercial customers value quality treasury management offerings more than ever—but they also want more from their banks. 

The arrival of API-enabled solutions and fit-for-purpose fintech capabilities is likely to alter the composition of treasury management products and services revenue pools. This will influence bank strategies for years to come.

Banks should not be complacent

Accenture Research confirms banks at this time are still the preferred treasury management provider, with fintechs remaining a minority player. However, organizations are satisfied with—but not enthusiastic about—the somewhat undifferentiated set of treasury management products and services they get from their banks.

 

This has created an opening that hungry new fintech companies are looking to exploit. Our survey found that 44% of respondents have considered moving to a fintech provider in the past year. 

Why are bank customers considering the move to a fintech for treasury services?

Even in the face of rising customer expectations and fierce competition, banks have several levers they can pull to optimize their treasury management experiences. You can get started today by taking the following steps.

Flex offerings and experiences to customer needs

Customize your offerings and experiences to meet customer needs in their preferred environments.

Focus on value-added services

Banks that offer an ecosystem of services like real-time visibility in portals, analytics tools, and forecasting stand out from competitors.

Optimize pricing

Pricing structure and transparency are critical, as cost is a primary reason banks switch to fintechs.

Empower treasury management talent

Customers prefer human engagement with treasury solutions – don't forget it is still a people business.

Download our report to further explore these next steps and reach out to your Accenture Commercial Banking lead to learn more.

59% of survey respondents are aware that fintech providers offer treasury services that could reduce their reliance on existing banking partners.

FAQ

The expectations of commercial banking customers are changing as treasury professionals become accustomed to the seamlessness of the tech they use as consumers. Furthermore, with treasury management becoming more strategic in a time of rising inflation and interest rates, companies are looking to treasury management providers to offer them more tailored services and higher levels of automation. At the same time, banks are facing growing competition from fintechs and other new players. They have reached a fork in the road where they have a choice between capitalizing on new developments to grow existing portfolio revenue and drive acquisition of new customers—or falling behind the market.

Fintech is new to treasury management, but it’s growing fast. Emerging fintech providers are entering the market with innovative, intuitive solutions for automating payables and receivables, streamlining cash flow forecasting, and digitizing core treasury management functions for small and large businesses alike. 

 

Some of them integrate capabilities such as purchase order generation, invoice digitization, exception handling, and cash application into a single offering. Many fintechs integrate treasury capabilities into ERP and accounting systems to offer a superior end-user experience. They also offer solutions that address challenges in underserved vertical markets and offer streamlined onboarding processes.

Banks hold insurance and regulatory certifications that allow them to offer services which fintechs cannot easily replicate. Their size, stability and access to low-cost capital are important to many commercial customers. Banks also have gateways to clearing and settlement financial market infrastructures and central banks, which fintechs lack.

Fintechs threaten banks’ treasury management business with commoditization and disintermediation. Some banks might choose to collaborate with fintechs to access new customer pools. However, such a relationship might see the fintech owning the customer interface, while leveraging the bank’s back-end functionality, balance sheet and regulatory power. This could erode a bank’s fees and diminish its relationship with its customers.

Timothy O'Donnell

Managing Director – Payments, US Northeast

Jake Horne

Director – Consulting, Banking

Brian Rutland

Director – Strategy, Banking

Tom Skomba

Director – Strategy, Banking

Contributor

Jared Rorrer

Managing Director – Global Commercial Banking and North America Banking Lead

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