Amidst all of the hype and activity around retail-oriented digital banking, it is sometimes easy for industry watchers to ignore the treasury and capital markets (TCM) sector. It can appear that the main focus for innovation is elsewhere. The suppliers seldom change, though they reduce in number through M&A, and many of the business pressures look little different from one year to the next.
However, such a superficial view would be wrong, as anyone who works in the TCM space will be only too aware. Today’s lower margins and heightened regulation mean there is a great deal of pressure to change. It means the emphasis is on reduced costs and better risk and liquidity management, in its different forms.
The interesting question is, what form will the change take? The rationalisation of systems has been something of a constant theme, even back to pre-2008, but this has become more pressing because of the cost drivers.
More sweepingly, there is a belief that utilities will have an important role to play, with a number of vendors and banks setting out their stalls. Does it make sense for everyone to maintain their own infrastructures when it comes to the operational side of the business? Can shared platforms take out larger swathes of costs than is the case with sequential internal improvements?
The jury is out and those with long memories might not be holding their collective breath. Such utilities have come and gone in the past. Often, they claimed healthy ‘pipelines’ almost up to the day they closed. The problem didn’t seem to be in generating interest, it was in getting people to finally make the leap. Outsourcing always sounds fine in theory but it is a major decision that is hard to reverse. Only if the drivers and proposed solutions are sufficiently strong will the theory turn into reality in the TCM space this time around.
In-depth analysis of this subject is published in our annual free IBS Journal Treasury & Capital Markets Supplement. Click here to read the Supplement.
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