Thursday, February 15, 2018 Stamford, CT USA — After weathering the chaos of the financial crisis and the subsequent restructuring of the European banking industry, Europe’s largest companies are enjoying a welcome phase of stability in their banking relationships. Credit is abundant (at least for big companies with good credit ratings), service is good and getting better, and banks are getting easier to work with.
Aside from European corporates, the primary beneficiaries of this new stability are the big banks that already count many of Europe’s largest companies as clients. At the top of that list sits BNP Paribas, which is used for corporate banking by 65% of Europe’s largest companies. HSBC is next at 56%, followed by Deutsche Bank at 43%, UniCredit at 38% and Citi at 37%. These banks are the 2018 Greenwich Share Leaders in European Top-Tier Large Corporate Banking. The 2018 Greenwich Quality Leaders are BNP Paribas, Citi, J.P. Morgan, and UniCredit.
Cash Management: Demand for Seamless Service Puts Focus on DigitalIn addition to overall service, banks looking for a way to differentiate are focusing on cash management—which Greenwich Associates research shows is as important as credit to a corporate banking relationship. “Banks know they won’t make a lot of money on this business directly, but cash management is the glue that holds a corporate banking relationship in place,” says Greenwich Associates consultant Melanie Casalis.
Banks are investing heavily in digital cash management platforms. Although currently only a handful of banks like Citi, J.P. Morgan and HSBC offer robust digital systems, in the not-too-distant future digital platforms that make cash management more seamless, efficient and truly integrated with other products offers will become minimum requirements for all banks.
Challenges Ahead for Second-Tier Bank
The increasing costs associated with building out digital banking and cash management systems will represent a major challenge for smaller banks attempting to compete for relationships with Europe’s large companies. So too will companies’ growing need for banking and cash management coverage in international markets that represent points of strength for the biggest global banks.
“In the past it was possible for smaller and regional banks to cover gaps in capabilities by throwing manpower at their biggest corporate relationships,” says Greenwich Associates Managing Director Dr. Tobias Miarka. “When it comes to issues like the need to deploy sophisticated technology platforms and build out cash management capabilities in overseas markets, we expect many second-tier banks to shift their focus from Europe’s largest companies to second-tier companies with needs that are more aligned with their own capabilities.”