For years banks' cash management businesses have focused on collecting receipts and executing payments for large traditional companies, minimizing their short-term borrowing needs and perhaps earning them a few basis points on overnight deposits of spare cash. Efficient management of cash resources is a boon to large companies. Banks that do it well earn good returns and tie themselves closely to companies as key banking providers. The leading banks have each invested hundreds of millions of dollars in the infrastructure required to move and monitor cash balances safely. In recent years, the trend has been towards large companies outsourcing large parts of their treasury operations to the biggest and most technologically advanced cash management banks.
Then came the internet.
Although the internet is not tearing up the rule-book in cash management, it is subtly altering the banks' business models, both changing the way banks provide these services and creating a new class of customers. Business-to-business exchanges and other online marketplaces all require a capacity to handle large volumes of payments and track cash movements.
Those corporates that have historically dealt largely through wholesale channels that the internet now allows them to sell directly to consumers. That has meant changes for most.