As thought leaders in the dynamic world of financial services, you would agree that the greatest challenge we so often grapple with is - how to form an everlasting bond with our corporate customers. As more and more banking services become commoditized, corporates have a multitude of choices for their banking requirements. This has led multinational corporations to clearly demarcate certain banks as “work horses” for their daily transaction activities such as collections and payments, salary disbursals etc. These banks are often labeled as “Transaction Banks” or ‘Peripheral Banks”. Once the regular banking needs have been met the corporate zeroes in on a single bank which has the expertise to manage ones cash better. The corporate expects that by forming a long term win win equation with this “Smart Bank” one will be able to squeeze the last dollar from the financial supply chain using advanced liquidity management techniques. A corporate designates this bank as ones “Treasury Bank” or “Principal Bank” and leaves ones ideal end of day balances in this bank. The Principal Bank optimizes the corporate’s cash and also offers advanced avenues for maximizing the returns.

You can do a small exercise yourself and see how many of your corporate clients have been using you for Principle Banking purposes. Our surveys reveal that the industry best percentages range from 15-20%. Would you not be interested to raise this figure to 30-40%. Well, with Intellect Liquidity Management Platform this is possible.

Transaction Bank and Principal Bank: Bridging the Divide

The journey of evolution to a principal bank can be achieved faster if we put the corporate at the center of our liquidity management strategy. Let us examine what a corporate would expect from its principal bank. Broadly the expectations of a multinational corporate from their ability to mirror: