Mapping a New World in Working Capital Management

November 22, 2005


San Francisco, CA, USA November 22, 2005

Best practice examples along the financial supply chain

Enterprising banks are breaking out of their traditional payment role to explore opportunities in financial supply chain automation and integration. To the degree they can optimize their commercial customers’ working capital, they will excel in the next generation of treasury products and services.

The gradual electronification of the financial supply chain is certain. How it will unfold is still uncertain and which players will dominate have yet to be determined. In a new report, " ," Celent provides a road map of the trends and best practices in the automation and integration of the financial supply chain. Because automation and integration require cooperation and collaboration between companies, technology providers, and banks, the report discusses all the players and pieces.

Companies are gradually realizing that their current financial supply chain practices are not sustainable, and that they must reduce their excess working capital. Although they are not a majority, there are treasury innovators, and they are found not only in the global corporations but also among an increasing number of midsize companies. These innovators are reducing the number of banks with whom they deal and attendant fees while improving their financial supply chain operations.

Banks’ role as mapmakers is currently uncertain. They have a big stake in the treasury services territory and consequently in the mapping of the e-financial supply chain landscape. Business-to-business payment-related services is a key revenue generator, churning out between $32 billion and $36 billion annually overall and accounting for over a third of wholesale banking revenues. Banks’ current territory is, however, under rising price pressure, and their pricing structure based on earnings credit rate and implicitly on float is no longer sustainable.

"Unless banks build bridges to customers’ archipelago of systems either directly or indirectly via partners, they will be relegated to the low-margin custody, clearing, and settlement business while others win in high-margin integration and information-related businesses," states Alenka Grealish, author of the report and manager of the banking group at Celent. "Only by venturing along the financial supply chain and adding value through system integration, business intelligence, and electronic payments can banks stem the erosion of revenues and margins and secure a position in the new world," she adds.

Celent predicts that over the next 10 years, global companies will deal with less than five banks selected based on ease of systems integration, cycle time reduction, and least cost routing.

This report profiles e-financial supply chain best practices at ABN AMRO, Avolent, JPMorgan Treasury Services, U.S. Bank, Xign, MasterCard, Lockheed Martin Aeronautics, Diebold, and an insurance company. This report is 30 pages and contains 15 figures and one table.

of Celent's Wholesale Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact for more information.


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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Michele Pace
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Yumi Nagaoka
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Table of Contents


San Francisco, CA, USA November 22,  2005

Return to report Abstract

Executive Summary 3
There Be Dragons 6
  Imperative to Map New Territory 6
  Mapping Terra Incognita 7
Hard To Slay The Dragon In One Sweep 11
  Companies Charting a Course Incrementally 15
  Companies Will Build With or Without Banks 15
  Companies Wary of it Rapids 17
Banks' Role as Mapmakers 19
  Imperative to Stake Out New Territory 19
  Build Bridges Rather Than Burn Them 22
  Beyond Electronification to Efficient Financing 23
  Examples of Early Explorers 25
Beyond The Dragons 29

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