SINGAPORE -- The organizers of Sibos 2015 were surely excited when Damian Glendinning, treasurer of Lenovo, agreed to speak at the conference. But after he spoke they might not want to invite him back.
Here’s a sample of what Glendinning told this conference of mostly bankers:
- “This is a wonderful conference and I’m really impressed. But I’m also wondering how much it costs. Because I know who’s paying for it.”
- “As a private consumer, with my very modest amount of funds available, I get far better service than I do as a treasurer of a fortune 500 company.”
- “Every time some regulator somewhere slaps a bank with a fine, who pays for it? We do.”
- “We’re all providing the same documents 19 times often to different branches of the same bank.”
When it comes to fees banks charge corporates, Glendinning didn’t hold back. “This is a wonderful conference and I’m really impressed,” he said. “But I’m also wondering how much it costs. Because I know who’s paying for it.”
An attendee who works for a large financial services company that works with corporate treasurers based in Asia, agreed that fees have become a major point of tension. “The one thing [treasurers] bring up is price of the services,” he said.
The key problem, Glendinning noted, is a lack of transparency around what the banks are billing over. “Really, the main issue you have as a corporate treasurer, is you don’t know what you’re paying,” he said. “You know that what you see is really only a portion of what’s being paid and in my mind, that’s one of the biggest issues in this industry.”
Glendinning wasn’t done. He also pointed out how poor banks have been on the technology side for corporate treasurers. “As a private consumer, with my very modest amount of funds available, I get far better service than I do as a treasurer of a fortune 500 company,” he said. “The online banking tools that you have available to you as a consumer are far better than the ones available to a corporate. They’re far more advanced, more user-friendly and in many cases they’re often far more secure.”
But why would banks be more concerned about making sure the user experience is better for consumers than with multinational corporations? “Because it’s more in banks’ interests to do it,” Glendinning stressed. “Banks in the past used to have huge branch networks with hundreds of thousands of employees. It was really in the banks’ best interest to invest in alternative systems so they could reduce the cost base.”
Servicing corporate clients is much more cost-effective for banks because there is no need a huge branch network and the ratio between the number of employees and the value of the transactions is far more favorable, Glendinning said. “Therefore, there has been far less investment in really advanced systems.”
Part of the problem, however, is the nature of corporate treasurers themselves, Glendinning added. Treasurers tend to be conservative, generally resisting change. However, this can be detrimental if treasury resists new players in the market. As bank regulations have become more severe and more expensive, the banks are simply passing those costs along to their corporate clients, he explained. This process isn’t going to stop, so corporate treasurers would be wise to consider alternative providers.
Glendinning noted that Chinese e-commerce giant Alibaba Group now has many of the features that bank typically would, but doesn’t have the restrictions of China’s highly regulated banks. Therefore, treasurers in China might ultimately eschew the banks and take their services to Alibaba. “Every time some regulator somewhere slaps a bank with a fine, who pays for it? We do,” he said. “If this carries on, we’re going to reach the point where there is the potential that banking system will become so rigid and expensive because of all of these constraints that we as corporate treasurers might go with these other guys; it’s so much easier.”
Of course, no discussion about tension in corporate-bank relationships would be complete without some talk about KYC regulations. “We talk about the different initials—KYC, AML—for me the biggest single problem in regulations these days is CYA,” Glendinning joked. “I actually sympathize with the bankers, because you’re dealing with regulations aren’t even clear. So tendency is to go overboard and make sure you get everything.”
Nevertheless, Glendinning is clearly frustrated with the burden KYC places on treasury. “We’re all providing the same documents 19 times often to different branches of the same bank,” he said.
Glendinning noted that the regulators enforcing KYC can’t even agree among each other what information is needed, and neither can the banks. Therefore, corporates, banks and regulators need to work together to resolve the issue. He believes that treasurers in particular need to band together and push back. “It’s very difficult to get corporates to act in unison on this,” he said. “But we actually need to start saying to the banks, ‘We’re going to provide this once to a central depository, you can go get it from them.’”