Barclays’ announcement last month that it had agreed to outsource cash management services for its larger UK corporate clients to Deutsche Bank is remarkable. Maintaining account services, domestic and international payments and collections, liquidity management and electronic banking are bread-and-butter banking activities. The provision of such unglamorous but vital services is an essential part of the cement that binds corporate customers to their relationship banks. So it can’t have been easy for Barclays to admit that its customers would be better off using Deutsche’s products and services than its own.
Peter Harvey, managing director of larger business at Barclays, put a brave face on the decision, even suggesting that the deal somehow reinforces Barclays’ commitment to cash management. But there’s no disguising the fact that the bank of choice for one-in-four UK businesses has acknowledged that it cannot meet its customers’ demands on its own. “Deutsche Bank is a recognized leader in this field,” Harvey says, “and making use of its infrastructure and expertise enables us to provide the integrated cross-border service that many large corporations require today.”
It’s a frank admission and one that might yet show that Barclays is ahead of many of its competitors, rather than a loser, in recognizing a fundamental change in the cash management business.
