November 28, 2013 by Leave a Comment
Commercial banks play a vital role in the financial system among; facilitating borrowing and lending for corporate clients to optimize their funds, provide specialized financial services to enable efficiency in transactions, and much more. Now imagine a world without banks. Corporations (excluding retail in this blog) would struggle to borrow money, spend much time seeking for savings options, and most likely increase their overall financial risks. Few can argue that all banks, large to small, bring much value to the financial system. And I agree. In this world without banks, corporations would need to leverage alternatives for borrowing in order to meet financial obligations and fund growth opportunities. Can you imagine such a scenario? This is in fact what many corporations have been facing over the last few years. Banks have reduced credit even to good businesses not because they want to but because they need to. Banks suffer balance sheet impairments arising from the financial crisis and have been forced to reduce the loan supply. So how have corporations reacted to this changing environment? Has the role banks play to corporate clients changed? Are corporate clients turning to their bank for strategic support and/or guidance? What can we anticipate corporations to do in the future regarding their bank relationships? Many good questions and the answers are in some cases multiple, others developing, and some uncertain or evolving. Where is the nucleus of the pain for corporates? I think it is in two main areas: 1. Seek funding for major capital investment such as M&A, and 2. Require funding to support growth opportunities (e.g. fund trade activity with increasingly foreign markets on goods) I will address on the latter point as this has been a more focused discussion topic for me with banks, vendors, and corporates. Aside from bonds, large corporates have been leveraging internal sources for funding. For specifically, corporate clients have been ‘smarter’ about their usage of cash and leveraging technology to make decisions on borrowing and investment. The number one priority where technology is an increasing contributor is liquidity to trade cash visibility and cash flow needs. Visibility is the key and it’s not just about today but t+5, etc. Corporates are moving beyond the intra-day cash management challenges and tackling investment decisions based on complex models. For example, if currency X hits this target and account balance is a minimum of Y, then perform Z. In sum, liquidity and trade and much more tied to the hip than before thanks to technology. This is also helping banks make better decisions on corporate lending across the entire visibility of accounts and relationship portfolio. Technology is also helping corporate clients have better analytics and integration to systems like ERPs, but this makes for a longer discussion. As the regulatory environment continues to put challenges on the players in the financial industry, the key players are finding ways to leverage technology to alleviate the pain and make good on growth opportunities. So what does this mean to the bank and corporate relationship in the future? I think technology and operating agility will evolve to strengthen the role of banks within the industry to enable corporate clients manage to STP processing while taking advantage of growth opportunities in the global marketplace.
November 15, 2013 by 1 Comment
I attended the AFP conference in Las Vegas. Attendance seemed high while this may be partially attributable to the fact that it was held in Las Vegas. Now I wish I can tell you more about the conference, but like they say, what happens in Vegas stays in Vegas. All jokes aside, it was a good conference for me with very productive meetings. Most of my meetings were centered on corporate-to-bank connectivity, mobile developments (tablet), foreign exchange, payment networks, and enhancements in reporting and analytics. Although there was some sense of déjà vu, I felt the conference had several new interesting trends. An interesting side observation: As you know, most of the attendees are corporate practitioners while my discussions are primarily with bankers and vendors with far less corporate clients. I bring this up since my findings in discussions with corporate treasurers, etc have been on quite different topics of interest. The corporate side seems very interested in the macro-economic and geo-political trends in the market including regulatory impacts. Okay, I guess everyone is interested in the regulatory environment. The combination of fiscal and deficit issues at the government combined with new regulatory standards is preventing a stable environment of lending and borrowing, let alone growth, in the market. Corporates are struggling to efficiently manage their liquidity while mitigating the risk of losses. I found there was less than usual interest on operational efficiencies and innovative solutions as seen at previous AFP conference venues. This could be attributable to the dominant economic and regulatory issues faced by corporates today, or possibly attributable to a smaller sample of discussions in comparison to bankers and vendors. In any event, I just wanted to make the point that bankers and vendors are aligned very differently in their focus area in contrast to corporate practitioners. Aside from the above observation, I noted several interesting trends: • Banking focus on relationships. Banks realize that their relationships with corporate clients will need to change. It’s not so much anymore about selling, or cross-selling, as many products as possible. The regulatory environment is causing corporate clients to have a much more consultative role with their banks. Banks are less concerned about product stickiness and revenue protection. The development of SAP Financial Services Network (FSN) is a good example as many global banks have promptly joined the network to best serve corporate clients. Surprisingly, this new solution does allow corporate clients to move relatively easy from bank to bank relationship. This is a concept that would have been much harder for banks to embrace only a few years ago. I think it goes to demonstrate the new bank mentality in being a partner and the race for the better bank partners will take flight in the coming years. • Vendors entering new frontiers. It was refreshing to see some developments on the vendor side in support of banks in new areas. Vendors are embracing mobile technology with processes that are client centric to help banks in areas that they have traditionally not played in – like sales and marketing. There are many vendors that I can credit here but this is a blog and space is limited. Two vendors that come top of mind are FISERV and Wausau Financial. They, like others, have taken the tablet and developed client facing solutions to support banks cross-sell products along with streamline client on-boarding and implementation. Not all banks are equal when it comes to their mobile development stage and some have embraced the technology more than others. The reality is mobile tablets can serve as excellent tools to improve the bottom line. • Enhancements on visibility. This is a broad category but mostly speaks to providing better analytics – forecasting cash and liquidity, optimizing returns on investment, risk management, and overall ability to meet regulatory and compliance requirements. The key players have done a good job of migrating from (I hate to use the term) big data to information that really counts. Vendors are driving innovation in analytics to facilitate simpler and faster processing of relevant data. This serves to address several business challenges through better forecasting and predictive analytics. Any other trends worthy of noting? Your comments are welcome so please feel free to chime in.
August 28, 2013 by Leave a Comment
On Tuesday, September 10, 2013 at 2 p.m. EST, TransCentra will be hosting a webinar event “The Future of Lockbox: 3 Key Trends for the Evolving Payments Environment” to address the importance of lockbox in an ever-changing payments environment. Paul Diegelman, SVP of TransCentra will host the event accompanied by two bank product management experts, Treasury Strategies, and Celent (myself). This blog will review some important factors relating to lockbox trends and opportunities. The reader will require a basic understanding from lockbox processes to fully appreciate the topics covered in this blog. Maximize Corporate ROI One of the key themes of the webinar will be to discuss how banks and lockbox providers can drive additional revenues while helping corporate users maximize their ROI. Lockbox opportunities do continue to exist amid continued paper volume declines. One way of enhancing the value proposition is cross-selling new service offerings such as data management tools. Banks and providers are able to enhance the value proposition and augment revenue per item by migrating corporate clients to image lockbox. After all, corporate don’t simply need a clearing house. They need solutions that provide informative data about their receivables from payments reconciliation to forecasting analytics. Even more than that, they need a comprehensive receivables solution which includes paper checks received from lockbox services. Retail versus Wholesale There is a big difference between retail and wholesale lockbox and that difference is continually increasing over time with the decline in Consumer-to-Business (C2B) check volumes for retail lockbox. Retail lockbox is a volumes game – without the high volume there is little opportunity to realize a ROI. Check decline has really kicked in only a few years ago despite the fact that many industry experts expected the decline about one decade ago. Wholesale lockbox on the other hand has much greater margins and cross-sell opportunities. Wholesale lockbox continues to specialize in vertical specific solutions such as healthcare, property management, and more. Banks and providers continue to go down market (small business) as the market is highly mature and the perception is that growth with middle market and large corporate clients is limited. It is important to note that clients often choose their bank lockbox provider based on the credit facility. Threats to Lockbox There are new products and channels that continue to threaten the revenue stream of lockbox services for banks and third-party providers. The two most likely are Remote Desktop Capture (RDC) and Mobile. Years ago, many experts predicted that RDC would cannibalize lockbox revenues. That has not been the case albeit we have seen a shift of volume from small business migrate to RDC. Mobile is a different story altogether. First off, Mobile is less about now but more about the future impact. In the short-term, Mobile will primarily be another value added feature for lockbox as it relates to reporting, alerts, etc. The next phase will see Mobile replace RDC as a complementary service for stray payments. This refers to those one-off payments where corporate clients can scan from their office and upload to their bank or provider to be processed with the other paper check receivables. Moving to the next phase of evolution, Mobile may replace small volume lockbox processing. The word “replace” may be a little harsh as the actual effect may be more of a shift in the business model. So instead of a lockbox service scanning and processing paper checks, it will process Mobile images. This only works for small volumes. I can’t imagine a corporate client receiving 10,000 checks per month deciding to take a picture and submit 500 checks per day throughout the month. However, a small business with 200 checks per month is a different situation. Technology – The Wild Factor The wild card in making predictions about the future is technology. Technology allows us to achieve tomorrow what we never thought possible today. So to build on my Mobile example above, imagine if technology can handle processing 10 checks in one click from a corporate client site. Bear with me as I’m making it up as I go. Imagine that you take two rows of checks with five in each row aligned side by side as though you are trying to fit them on a 8” X 13” sheet. Yes, I know it doesn’t actually fit since I just tried it but just a few inches off from fitting. Now imagine that you take your phone, logon (I logged onto my bank mobile capture app), and take a picture. It took me less than a minute. Now assume the bank or provider can take that image, parse out the checks, and process each as though they were received at the bank/provider as a paper check in lockbox services. With that business process, you can easily scan a stack of checks from the client site in a few minutes. The volume and timing does decrease if you also plan to scan any invoices, envelope, etc. However, you can still scan and process a transaction (check, invoice, etc.) in less than a minute with one picture. This would drastically change the business model since the bank continues to process lockbox services without the lockbox department. Okay, so you still need some personnel for data validation and correction – but many (expensive) parts of the process go away (sorting, extraction, etc.). Banks and providers would charge very differently for their services and the processing elements (OCR, ICR, etc.) can shift from bank to client. Closing Thoughts The example above was simply a hypothetical scenario of Mobile changing lockbox processing and the overall business model. The predictions about the decline of paper checks made over one decade ago have fallen short of many expert forecasts. Only recently, have we seen a drastic decline in retail lockbox volumes sufficient enough to alter bank and provider services. Wholesale lockbox continues to be significant revenue for bank cash management services. Please join us on September 10 to hear what several leading experts have to say about the future of lockbox.
August 2, 2013 by Leave a Comment
Regulation and technology are changing the banking business model while the SME segment may be the better investment going forward. The Small and Medium Enterprise (SME) is a vital segment for the economy in the US and globally. The growth rate for SME on a global scale has been on the rise. More specifically, we anticipate the highest growth rates to come from the BRICSA countries (Brazil, Russia, India, China, and South Africa). . In India for instance, SME accounts for about 45 percent of manufacturing and 40 percent of total exports. Many governments and experts believe that economic recovery will come from SMEs in emerging markets. This rise of SMEs is primarily attributed to their increasing tendency to reach foreign markets. Their growth and overall strategy patterns demonstrate success in trading within the global marketplace. For financial institutions, the revenue opportunity from SME is high. Traditionally, banks would provide loans to SMEs and offer standard billing fees (non-discounted high fees) to these clients. For instance, it’s very much like walking into a branch as a retail client and paying $35.00USD for a Wire transfer. The banking relationships between lending and transaction type services were highly tied together between the SME and bank. Today, banking relationships with SMEs are highly different for a number of reasons. For instance, many SMEs are able to find alternative financing so lending is not a leading cause for the relationship. Accessing financing once the SME is established is less of a problem. Also, many SME are cautious about the future and have been much more frugal about spending their money. On aggregate, their cash on hand is much healthier than it was years ago. But it goes much further than lending. SMEs have different needs as they expand their growth to foreign markets. They need trade finance and other FX type services. And it’s not just the SMEs that are changing – local banks are also equipping themselves with enhanced products and services to meet those needs. The competition for this market segment among banks is increasingly fierce and represents an important opportunity for growth. The competition is highly fragmented and its’ intensity highly depends on the specific geography. However, the regulatory environment has caused banks to focus on their balance sheet while taking a cautious approach to growth markets. This may explain why several global banks have scaled back their market expansion strategy while local banks have stepped up their game. Global banks are cherry picking their clients in those emerging markets which generally fall outside of SMEs. This leaves a great opportunity for growth from smaller banks and the industry is seeing a more aggressive investment into technology from those smaller banks to serve SMEs. Traditional business models have changed significantly. The culprit is technology. New technology and business processes change the way businesses operate and interact with their bank. In sum, the ability for clients to switch banks has never been easier. While banks have strengthened their balanced sheets, both regulation and technology continue to drive unprecedented challenges. Banks will need to be smart about where to invest their capital and the SME segment seems like a good option.
July 26, 2013 by Leave a Comment
The large financial institutions have been voicing their concerns of how regulation will have adverse impacts to the financial sector, including the overall economic recovery. In fact, many experts have predicted that bank profitability will suffer as a result of these regulatory changes. The argument does make sense: less capital to lend and increased liquidity buffers will limit the financial institutions ability to generate revenue via lending volume. However, the recent Q2 results from the US global banks are puzzling. The levels of profitability have surprised analysts. Large US banks such as Bank of America, Citigroup, Goldman Sachs, JPMorgan, and more have all posted unexpected results. So the results cannot be attributed to an anomaly such as a one-time tax write-off, etc. There is some market factor creating this type of outcome. Are banks generating more revenue? Have banks reduced their costs? Is it an economic factor? It is true that low rates are helping but it remains that banks are out-performing expectations. I don’t think we can attribute the performance to economic recovery – yet. Let’s start with the cost side. There has been a push towards improving the banks’ efficiency ratio over the last few years. In other words, reduce the costs so that the efficiency ratio is better than the industry average. The problem is that if most banks are simultaneously trying to reach better than average then it keeps moving that number resulting in continued cuts in spending. In other words, banks are chasing the efficiency ratio rather than trying to hit a specific number. This affects many areas including staffing, infrastructure, investment in technology, and much more. I believe the driver was the anticipated, and realistic, augmentation in regulatory staffing and technology investment. In the recent months, I have heard trends supported by vendors to support this movement as it relates to spending. The bottom line is that banks seem to have been spending less on an aggregate – at least domestically in the US market. If you have been reading press headlines lately, the reoccurring themes look like “Bank A Settles for $XXX Million”, “Bank B Will Cut XXXX Jobs”, etc. Now let’s review the revenue side of the equation. Banks are having, and will increasingly have, difficulty in sustaining lending revenue due the regulatory demands for more liquidity. The press headlines are even more alarming, “Bank C Plays Down EU Cap Fee”, “Bank D Sells X Unit Due to Losses”, “Bank E Reports Flat on Lending Revenue”, etc. Back to the vendor perspective, many IT software firms supporting financial services have reported an increase in activity from banks (spending) in emerging markets. This supports the broader observance that banks are retrenching in their domestic / core markets while cherry picking in the emerging markets. In essence, global banks are targeting high yielding clients in emerging market countries where the existing domestic banks lack the competitive capabilities. This is another factor which can contribute to higher profits and support the observations of technology investment in targeted emerging markets to satisfy specific capabilities. Regardless of the cause, this short-term gain from banks could hurt them in the long-term. The regulatory pressure for banks remains high including the negative attention. This type of performance makes it difficult for banks to formulate an argument that more regulation is hurting them. The recent performance can fuel the continued political debates on banks “gambling” in the marketplace to boost profits – whether it’s true or not. This may indeed lead to more regulation and add hurdles to banks in the spirit of sparing taxpayers from another crisis. Is this not a good time for banks to spend more money now to augment their competitive advantages in the global marketplace? This approach would serve the banks short-term and long-term best interest.
July 9, 2013 by Leave a Comment
Banks have been struggling to keep up with the regulatory demands in place from the likes of Basel, Dodd-Frank, and more. In a previous blog post, I discussed some of the hurdles banks are facing including, but not limited to, the technical or technological needs to meet requirements. Now, we are seeing other non-intended consequences from the regulations which are forcing change for banks in areas they did not expect. These changes are required from areas beyond the regulatory task teams. In Dodd-Frank for instance, there is a provision in the Volker rule outlining the limitation for employees to participate in bank run investments. This limits the ability for employees to invest their contributions in bank fund investments. Hence, we will see a clear delineation between client investments versus employee (management and non-management) investments. This could become very messy as you consider existing and new employment scenarios. Will someone refuse, or be declined, employment at a financial institution if they have investments with that institution? Bank interpretation of this rule has been diverse and we have seen banks act very differently. For example, Citigroup has decided to implement these limitations to all of their employees regardless of rank. Other banks have such as JPMorgan have taken a relaxed approach to this rule while Wells Fargo is still on the fence. Either way, banks are going to need more clarification, or at least consistency, in how to handle this rule. In the example above, we see how the desire for more bank scrutiny on risks will impact investment portfolios and opportunities for the working class. The flip side of the argument is this will also prevent top executives from inflated profits. However, the pending question is whether this will have any impact to reducing bank risks as intended by the Volker rule. Meanwhile on cross-border rules, several lawmakers are concerned that US global banks will engage in risky trading practices in foreign markets. Nothing in the currently drafted regulations will stop them from doing so, and American taxpayers can again be on the hook for losses. This is another example where reducing bank risks may have unanticipated consequences. There are many such examples of where regulatory reform falls short of securing the financial system. One key aspect that remains clear is that the financial system will always have some level of risk and all we can hope for is that risks are simply reduced. In the end, we must hold top executives accountable with financial accountability of their future potential failures. There is no better motivator than holding decision makers with skin in the game.
April 23, 2013 by Leave a Comment
Bank revenue is the hot topic today. How are banks performing in spite of the regulatory costs imposed on their business model? More importantly, what does the future look like? Let’s start with current events and performance. The press headlines these days reflect a poor performance from US banks in terms of revenue and performance. Examples include a decline in profit from Bancorp South, Bank of America, Bank of Hawaii, BNY Mellon, Capital One, Fifth Third, Huntington, JP Morgan, Sun Trust, and Wells Fargo. However, a few banks have demonstrated a better performance such as City National, and Zions. Many of these banks are attributing their poor performance due to the housing loans. There is another important element. Banks have been spending more on regulation and these costs are impacting the bottom line. According to the Federal Register, Dodd-Frank alone has imposed $14.2 billion in direct compliance costs since its passage and will require 25,679 full-time employees to file 51.2 million hours of paperwork annually (as of Q3 2012). In the global arena, some of the largest commercial banks are pulling out of high growth markets in the Middle East and certain regions in Asia. This appears to be in response to the tightening regulatory rules on anti-money laundering and will contribute to further declines in revenue. So what does the future hold for bank financial performance? Let’s be clear on one point – cost of compliance to regulations is not going away anytime soon. With Basel III, this has impact to all large banks (over $50 billion in assets) beyond the US marketplace. The regulatory implications will likely require banks to invest heavily in technology to meet the dynamic reporting demands. In sum, cost will go up for banks. It’s really a simple formula – Profit is equal to Revenue minus Expense. So banks will need to find a way to boost revenue. This is easier said than done. The regulatory implications expect to cause lower revenue. According to a Standard & Poor’s report last year, “The Dodd-Frank Act could reduce pre-tax earnings for the eight large, complex banks by a total of $22 billion to $34 billion annually – higher than our previous estimate of $19.5 billion to $26 billion”. So what should banks do to get better performance? At the end of the day, businesses need banks and their services. Banks have been successful at selling deeper into the client value proposition – although there is competition from non-banks. Banks need to continue on this trajectory if they want to be successful. Instead of cutting costs across the board, they need to invest in new products and services. This does not limit bank options to product development. There are other ways to get there. For instance, banks can leverage partnerships (domestic and foreign) for market and vertical expansion. We have seen lots of activity in the press around bank M&A. My question is “why aren’t banks buying non-banks?” Banks should be buying technology firms, firms to augment distribution of their products (e.g. small business solutions), etc.. You don’t even need to buy the firm; you can conduct a joint venture. It’s okay for banks to try something new and different. Banks will need to change their traditional ways of doing business and act slightly more entrepreneurial. It’s not like they need to bet the bank away. We did see some of this many years ago when a few leading US banks bought firms in the payments and healthcare space to penetrate that market. The results were not fantastic. It doesn’t mean they should give up. How will the economy be impacted by these events in the financial sector? There are two sides of the answer. The taxpayers will be less at risk for another systematic risk to bail out banks. This is the good news. However, there will be a price to pay (rightfully or wrongfully). According to a report published by Oliver Wyman last year, “The Volker Rule cost American businesses up to $315 billion, increase borrowing costs by up to $43 billion per year, require 6,600,000 hours of implementation, dramatically which reduces liquidity”. I think that Small Business will be hardest hit. The smaller banks, those that are over $50 billion but still regional, will need to abide by the same liquidity regulatory requirements as the biggest global banks. This will translate to less lending to small businesses and have downstream effects on the economy.
April 1, 2013 by 1 Comment
We are seeing continued cost alignment from banks both on the retail and commercial side. The trend is nothing new and we keep getting steady news and development to support this focus on cost re-alignment. Most recently on the retail side of the house, there are continued down-sizing on branches. The number of branches keeps going down year-over-year – at least in the US market. According to SNL Financial in Charlottesville, Virginia, 2,267 branches were shut down in 2012 within the US bank market. That places the branch count at about 93,000 according to AlixPartners and expected to reach about 80,000 within the next 10 years. According to banks, branches are too expensive to operate and each shut down saves a bank between $250, 000 to $500,000 annual depending on the source. And before you think it, it’s also the big banks clamouring down on these costs. Bank of America closed over 200 branches last year according to The Wall Street Journal. On the commercial side, it seems as though costs are equally shuffling but appears somewhat more complicated. For instance, some costs are going up due partially to regulatory forces and also to technology. Banks are investing in technology to reach new market segments. Small banks are trying to move up market while large banks are trying to move down market and everyone is trying to protect their base from the bank next door. There is a perception that their market is saturated and the avenue to growth lies in a new market segment. Often the best way to get there (assuming a bank can get there) is via technology. For example, larger banks with more R&D capital are developing more comprehensive small business suites. The use of new technology such as mobile tablets is hot. For the regulatory aspect, new laws and bills such as Basel III and Dodd-Frank are causing banks to invest – yes more cost. But it doesn’t stop there. These new regulations will also cause banks to re-align their lending since more liquid capital will be required to remain compliant. So this will impact margins and arguably cost to revenue ratio. Then there is the resource and technology cost component associated to these regulations. It appears Basel III will require more technology investment than Dodd-Frank based on the reporting requirements. Banks are generally not wired to offer those types of reports today. All of these investments (or costs from the banker’s point of view) are good for the market. It improves the quality of services from banks which will serve them well in the long-term. Banks will continue to see third-party companies drive innovation into the payment (financial) space and their ability to compete in the long-term will ensure their health and potentially survival. On the next blog, I will explore the other side of the equation… revenue. Banks need to offset these expenses with new revenue. They should be paying attention to vendor partners to dig deeper into the corporate client value proposition. There are several ways they can do this. If they don’t, someone else will! More to come on this topic for the next blog – stay tuned.
January 25, 2013 by 2 Comments
Celent is challenging all to come up with the best definition of innovation in six words or less. We will be evaluating these stories as definitions and selecting a winner at Celent Innovation and Insight (I&I) Day in Boston on February 27th. There will be prizes! We encourage you to come up with your own definition and submit your entries to us. You can leave comments on this blog, send an email to Erica Ferguson at email@example.com using the subject line “Innovation Is” along with your contact information, or join our LinkedIn group created especially for this challenge. We have received numerous submissions so far! You can check out your competition here. I can’t wait to read your thoughts on innovation and see you at Celent’s I&I Day in Boston. I have put much thought into this challenge and came up with several definitions myself. My favorite definition for innovation is only three words. In essence, innovation must meet two important criteria. First, it must include some element of difference or change of the current process. Second, and equally important, it must be appealing. Hence, my entry: Different and Cool Some important guidelines to your entry: 1. (Legitimate) hyphenated words count as one word. 2. You may use a maximum of six words. You may use fewer, but under no circumstances should you use less than one. 3. Creative use of spaces within made-up words may be allowed at the discretion of the judges. 4. The use of pictures is not permitted (after all, a picture is worth a thousand words). 5. Some settling of contents may occur during shipping and handling.
November 13, 2012 by Leave a Comment
I had the pleasure of attending the SIBOS Annual Conference in Osaka, Japan last week with several of my colleagues in the Celent banking team. I spent much of my time at the event in constructive meetings with clients and prospects. Several industry leading vendors have organized fantastic events. A few I would like to call out include Bottomline Technologies, Fiserv, NEC, and SunGard. The Clearing House equally organized a delightful evening and the closing event from SWIFT was entertaining. In terms of topics, I have heard several recurring themes through various meetings. These include: Risk Mitigation – fraud detection tools/processes, analyze client behavior from bank data for decision/alerts, advanced fund movement (e.g. country capital flight), etc. Cost Reduction – banks focus on reducing costs via technology/processes to remain competitive (e.g. replace non-differentiating processes with cheaper solution), operational efficiency, etc. Analytics – the top three value propositions include superior customer service, cross sell/revenue opportunity, and operational efficiency. I think the cross sell/revenue opportunity is the hot button for banks at this time. Mobile – continues to be a hot topic. The opportunity is likely in growth markets P2P and commerce in developed countries. Real Time/Near Time – processing of payments. Real time view of liquidity with clients – critical for regulatory which impacts front end so clients can have visibility. Banks at various maturity stages as it relates to real time with liquidity. Treasury Services – Cash Management Services in Asia growing. Asian banks appear eager to win back business from U.S. banks. BPO – corporates seek to speed up settlement. Asia market appears highly interested in BPO despite higher L/C uses (I heard 60% +). Core value appears to be the ability to get financing (i.e. BPO used as an instrument). Several open items around accounting perspective, regulatory perspective (ICC rulings), etc.