Five Challenges Of Cash Management Business: Meticulous Management

No matter how the financial and economic environment changes, cash management, as the needs of enterprises and the services provided by commercial banks, has been very stable, foundational and innovative from the depth or breadth.

At present, many commercial banks in China regard cash management as a strategic business and have received close attention from senior banks.

The development practice of cash management also proves that cash management is an innovative and continuous business to develop and stabilize a good customer structure and create diversified non interest income in the passive debt products offered by commercial banks.

As a bank innovative financial services with low capital consumption and high value contribution, cash management can deepen the relationship between banks and business customers, and become a natural barrier to prevent the loss of corporate customers. It can not only lock in the deposits and loans of large customers, improve customer loyalty and stabilize high-quality customers, but also provide cross selling for the use of enterprise funds through the service of enterprise capital and paction management, and obtain stable and generous intermediate business income.

As more and more business operations extend from a single entity to the entire supply chain, higher demand for cash management service capabilities of commercial banks is also required.

In the future, in addition to providing basic services such as daily payment management, account management, fund collection and allocation, accounts receivable management, cash management as a comprehensive solution, we need to provide global and integrated centralized management services for enterprises, and integrate them into the internal management process of enterprises.

In the process of achieving this goal, the development of cash management business faces at least five challenges.

The implementation of the integrated operation of foreign currency by commercial banks is not only a need for the development of the macroeconomic and financial situation of the world's integration of economy and finance, but also a financial demand for the integration of foreign currencies and the market.

The development of international economic and trade has promoted the globalization of production, trade and investment in enterprises.

The scale of Chinese enterprises' investment abroad is increasing, investment fields are expanding and investment is accelerating.

According to the data released by the Ministry of Commerce, in 2012, investors in China made direct investments in 4425 overseas enterprises in 141 countries and regions, totaling $77 billion 220 million in non-financial direct investment, an increase of 28.6% over the same period last year.

With the acceleration of RMB internationalization and the trend of world economic and financial integration, the integration of foreign currencies has become an important yardstick for measuring the internationalization of commercial banks.

At present, most banks in China are relatively independent in the management of foreign currency and foreign currencies, accounting systems, post operations and management methods have their own systems. The international business department is responsible for the operation of foreign currency business, while other departments operate the local currency business.

This leads to the extremely uneven development of the foreign currency business, the difficulty in internal supervision and risk control, and also hinders the banks to provide multi currency, multi-functional and all-round financial services for their clients.

The integration of foreign currency means the deepening integration of commercial banks' customer relations, the sharing of resources, the integration of different sectors of business, the improvement of service quality, and the enhancement of market competitiveness.

If every business of foreign banks is multi currency operation, there is no differentiation of foreign currency business at all.

This undoubtedly provides great convenience for the global operation of its business customers, and also exerts a competitive pressure on the cash management development of Chinese banks.

Different types of enterprises have different emphasis on the demand for cash management services, which determines the commercial banks' subdivision in the development of cash management business, and provide targeted cash management services accordingly.

The fine management level of cash management will determine the market competitiveness and self positioning of commercial banks.

From the perspective of cash management customer segmentation in most banks, there are several classifications.

First, the cash management customers are divided into "going out" enterprises and "walking in" enterprises according to the local and cross-border situations of enterprises.

The demand of "going out" enterprises lies in the effective utilization of the two major markets at home and abroad, so as to ensure timely and smooth flow of information and capital, and facilitate the headquarters to grasp the overall situation. The "coming in" enterprises are faced with the problems of overseas cooperative banks having fewer outlets in China, unfamiliar with China policy, and lack of business experience; and the two is to provide industrial cash management solutions based on the industry generality based on the industry segments of enterprises, which is also what most banks are doing at present.

For example, the Construction Bank (601939, stock bar) has different solutions for financial companies, automobile dealers, direct selling enterprises, retail supermarkets and so on. Three, it is divided into group enterprise customers and small and medium-sized enterprise customers according to the size of the enterprise.

In view of the characteristics of group business customers, such as cross regional operation, various types of member organizations and complex financial management structure, it focuses on improving the intensification and integration of account management, payment and management, and liquidity management, especially enhancing the visibility of cash flow, and changing the "three high" to "three low".

For small and medium enterprise customers, they focus on providing professional account management, efficient and secure payment channels, high return deposit and financial services, and so on. Through accumulating good funds to settle credit, improve the ability of direct financing.

Whether it is the scale division of the vertical field, the upstream and downstream of the industrial chain, or the industry and Regionalism in the horizontal field, differentiated positioning and meticulous management will be the second major factors that commercial banks need to pay attention to in building cash management brand and improving product service influence in the future.

After years of development, China's commercial banks have made breakthroughs in the research and development of cash management products. From the initial account management, capital pool and centralized payment, they gradually developed to include diversified financing products including short-term investment and financing, enhanced asset mobility products, risk management and foreign currency financing.

But in general, there are still few varieties, small scale and insufficient originality.

When meeting the special needs of enterprises, it is often difficult to meet the needs of comprehensive financial management of enterprises by integrating the developed cash management products with the needs of enterprises.

The innovation of products should be a systematic project of cooperation and integration of relevant departments of commercial banks wholesale business line, marketing business line, backstage support, IT system, resource protection and so on.

Commercial banks should build a cash management product innovation system from three aspects of strategy and management, organization and pformation, talent and technology to meet the four requirements of scientific development planning, keen market reaction, advanced IT support and effective resource allocation.

In addition, we need to develop strategies for product and business focus, namely, through business and product planning, in-depth analysis and development of market focus strategy, focusing on key customers and key areas.

IT's supporting capability

With the development of computer technology, network information technology, mobile technology and Internet of things technology, e-banking technology has been continuously upgraded.

Relying on advanced information technology, banks have launched a series of innovative cash management products: cross bank capital management system, cash management platform, online supply chain finance, mobile banking and telephone banking. At the same time, the company's online banking, banking and enterprise direct channels have been continuously widened, and the functions of public electronic banking products have been constantly improved.

Strong IT system is the key to achieve innovation in cash management.

It needs not only to ensure the safety of enterprise funds, but also to ensure that banks can help customers integrate different channels and services compatibility of different ERP systems through their own platforms and systems. At the same time, it is necessary to link the overall risk control and loan management of banks by collecting enterprise funds and paction information.

Cash management business is a platform to integrate banking business. It is becoming a new tool and new means for commercial banks to expand their business and compete for high-end corporate clients.

Cash management products and services are moving slowly from the background to the front stage, integrating products and marketing, highlighting specialized teams and marketing support services, and forming the former, middle and backstage patterns gradually.

This puts forward higher requirements for commercial banks to set up a perfect system for integrating information and resource sharing among various business departments. Cash management, as a comprehensive service with a wide range of processes and complex processes, involves banks in all aspects of public business, and talent has become the core element in realizing the development of cash management business.

Cultivating a high level cash management product R & D team and marketing team will be a big problem for commercial banks in the long run.

In short, after the initial rapid development, cash management business has entered a critical period of development in China. How to effectively cope with challenges and break through the bottleneck of business development will be the key to the successful pformation of commercial banks in China.