MBA Project Report - Liquidity Management

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COMPARATIVE ANALYSIS OF CASH MANAGEMENT SERVICES
OFFERED BY BANKS AND
IT’S EFFECTIVENESS TOWARDS CORPORATE BUSINESS
By
MOHAN V
Roll No. 1313MBA0110
Reg. No. 68613100065
A PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENT SCIENCES
in partial fulfillment for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION

CENTRE FOR DISTANCE EDUCATION
ANNA UNIVERSITY
CHENNAI 600 025

March, 2015

i

BONAFIDE CERTIFICATE
Certified that the Project report titled Comparative Analysis of Cash Management Services
Offered by Banks and its Effectiveness towards Corporate Business is the bonafide work of
Mr. V. Mohan who carried out the work under my supervision. Certified further that to the
best of my knowledge the work reported herein does not form part of any other project report
or dissertation on the basis of which a degree or award was conferred on an earlier occasion
on this or any other candidate.

Signature of Student
V. MOHAN
Roll No. 1313MBA0110
Reg. No. 68613100065

Signature of Guide
Dr. K. SAMPATH KUMAR
B.A. (Economics), BGL, M.Com, MPhil, Cert. A.I.I.B.,
MBA (Finance), MBA (HR & Marketing), ACS, FCMA, Ph. D.,
Professor, SSN School of Management
C/o. SSN College of Engineering
Rajiv Gandhi Salai (OMR)
KALAVAKKAM - 603110
Kanchipuram District, Tamil Nadu, India.

ii

ABSTRACT

Cash management services offered primarily to larger business customers. Cash
management is the stewardship or proper use of an entity’s cash resources. It serves as the means
to keep an organization functioning by making the best use of cash or liquid resources of the
organization. Plenty of services have been provided by commercial bank such as cash
concentration, zero balance accounting, and automated clearing house facilities. Sometimes,
private bank customers are also given cash management services for managing their cash.
Managing liquidity is the ability of a corporate to meet its cash needs effectively through
cash balance and to mitigate the risk of insolvency on business’s routine payments. For these
reasons, corporates use special techniques to keep cash in/out flows and cash reserves at the
optimal level to obtain the funding when it’s needed most.
This study details the list of cash management services provided by commercial banks to
its corporate customers and comparing the effectiveness of the services provided using consumer
perception and the market data available. The modern concepts of efficiency analysis of the
services offered to customers realized that measuring consumer needs or behavior was not enough.
´ CONSUMER PERCEPTION ´ should be the core and then the correct perception on which cash
management services on banks should be built. Banks must think of itself not as producing
products but as providing customer oriented services to match their business needs.
This study mainly deals with:
 Comparative analysis of the selective banks about their customized products and services,
according to the customer needed.
 To study the experience and expectations of the existing customers.
 To study to improve the current standards of services.
 To study the scope of introducing new types of services.

iii

ACKNOWLEDGEMENT

Perfect is the famous saying and when a person get practical experience under the
guidance of expert of the respective field, the knowledge gained is priceless.
With the sense of great pleasure and satisfaction, I present this project report entitled
“Comparative Analysis of Cash Management Services Offered by Banks and its Effectiveness
towards Corporate Business” completing a task successfully is never a man efforts similarly
completion of this report is the result of invaluable support and contribution of number of the
peoples in direct and indirect manner.
First of all, I would like to say my heartfelt thanks to My Guide Dr. K.SAMPATH
KUMAR for being a constant source of information and guidance throughout the project.
Without his able support the project I may not have been able to complete this research.
At this juncture, I would also like to thank the cash managers, treasurers and financial
officers for their support and their responses for the questionnaires related to cash
management services. Without their indispensable cooperation, the project won’t have been
completed within the stipulated time period.

Signature
V. MOHAN

iv

TABLE OF CONTENTS
CHAPTER 1.............................................................................................................. 2
1.1.

INTRODUCTION............................................................................................. 2

1.2.

Cash Management Services generally offered............................................................2

1.2.1.

Cash Concentration Services............................................................................. 2

1.2.2.

Account Reconcilement Services........................................................................2

1.2.3.

Advanced Web Services................................................................................... 3

1.2.4.

Automated Clearing House............................................................................... 3

1.2.5.

Balance Reporting Services............................................................................... 5

1.2.6.

Lockbox services............................................................................................ 5

1.2.7.

Sweep Accounts............................................................................................. 5

1.2.8.

Zero Balance Accounting.................................................................................. 5

1.2.9.

Wire Transfer................................................................................................ 6

1.2.10.

Controlled Disbursement (Intraday).....................................................................6

1.2.11.

Cash Forecasting............................................................................................ 7

1.2.12.

Profitable Deployment of Surplus Funds...............................................................7

1.2.13.

Economical Borrowings................................................................................... 7

1.3.

PURPOSE OF CASH MANAGEMENT..................................................................7

1.4.

NOTIONAL POOLING...................................................................................... 8

1.5.

OBJECTIVES OF THE STUDY........................................................................... 8

1.5.1.

Primary Objectives......................................................................................... 8

1.5.2.

Secondary Objectives...................................................................................... 9

1.6.

SCOPE OF THE STUDY.................................................................................... 9

CHAPTER 2............................................................................................................ 11
2.1.

REVIEW OF LITERATURE.............................................................................. 11

2.2.

REVIEW OF PREVIOUS STUDIES....................................................................11

CHAPTER 3............................................................................................................ 14
v

3.1.

RESEARCH DESIGN...................................................................................... 14

3.2.

POPULATION:............................................................................................... 14

3.3.

SAMPLE SIZE:.............................................................................................. 14

3.4.

SAMPLING TECHNIQUE................................................................................ 14

3.5.

DATA COLLECTION METHOD........................................................................15

3.5.1.

Primary Data............................................................................................... 15

3.5.2.

Secondary Data............................................................................................ 15

3.6.

STATISTICAL TOOL....................................................................................... 15

3.6.1.

Percentage Analysis...................................................................................... 15

3.6.2.

Two way Anova........................................................................................... 15

3.6.3.

Weighted Average......................................................................................... 16

3.6.4.

Bar Diagram:............................................................................................... 16

3.7.

LIMITATIONS............................................................................................... 16

CHAPTER 4............................................................................................................ 18
4.1.

DATA ANALYSIS AND INTERPRETATION.........................................................18

CHAPTER 5............................................................................................................ 49
5.1.

FINDINGS OF THE STUDY............................................................................. 49

5.2.

SUGGESSTION & RECOMMENDATIONS:.........................................................52

5.3.

CONCLUSIONS:............................................................................................ 52

5.4.

SCOPE FOR FUTURE RESEARCH....................................................................53

APPENDIX 1 - QUESTIONARIE............................................................................... 54
*** MBA Final Project Survey ***.............................................................................. 54
REFERENCES....................................................................................................... 59

vi

LIST OF TABLES
Table 4.1-1: Approximate Annual Turnover of the Business........................................................
Table 4.1-2: Table Showing Bank chosen for ICM Services........................................................
Table 4.1-3: Table showing Bank’s Cash Management Service Rating.......................................
Table 4.1-4: Table Showing Number of Banks Accounts maintained..........................................
Table 4.1-5: Table showing intention to change the number of ICM providers...........................
Table 4.1-6: Table Showing Main Reason for Changing ICM Provider.......................................
Table 4.1-7: Table Showing Usage of a Common Electronic Bank Billing Format.....................
Table 4.1-8: Table Showing Adequate Transparency and Accuracy.............................................
Table 4.1-9: Table showing kind of ICM Services used to Manage Cash....................................
Table 4.1-10: Table Showing Type of Investment made in Bank.................................................
Table 4.1-11: Table showing easiest ways to verify the Account Balance....................................
Table 4.1-12: Table showing Rating on Effectiveness of Cash Management Services................
Table 4.1-13: Table showing Comfortable Risk/Return Scenario................................................
Table 4.1-14: Table showing Better Control of Cash Positions....................................................
Table 4.1-15: Table showing Top Challenges to Cash Management Process Efficiency.............
Table 4.1-16: Table showing Awareness of Penalties to make Cash available.............................
Table 4.1-17: Table showing preferred Channels to access Banking Services.............................
Table 4.1-18: Table showing Investment Banking Product most familiar with............................
Table 4.1-19: Table showing ICM Services given more Importance by the Bank.......................
Table 4.1-20: Table showing satisfaction with the Charges imposed by Banks for not
maintaining the Minimum Balance...............................................................................................
Table 4.1-21: Table showing Opinion about the Cash Management Services in Bank................
Table 4.1-22: Table showing strategy to control Customer Erosion from Banks.........................
Table 4.1-23: Table showing Reason behind choosing the Bank for holding Accounts...............
Table 4.1-24: Table showing Bank is providing Single point of Access to Customers................
Table 4.1-25: Table showing satisfaction level with the Cash Management services in Bank.....
vii

viii

CHAPTER 1
INTRODUCTION

1

CHAPTER 1
1.1. INTRODUCTION
Cash Management is a marketing term for certain services offered primarily to larger
business customers. It may be used to describe all bank accounts (such as checking accounts)
provided to businesses of a certain size, but it is more often used to describe specific services
such as Cash Concentration, Zero Balance Accounting, and Automated Clearing House
Facilities. Sometimes, private bank customers are given Cash Management Services.
1.2. Cash Management Services generally offered
The following is the list of services generally offered by banks and utilized by larger
businesses and corporations:
1.2.1. Cash Concentration Services
Automatically moving funds automatically between client accounts using sweep account
of the bank for better cash administration. Consolidate your monies from a number of bank
accounts (sub accounts) into a single master account for better cash administration.

Figure 1.2.1-1 Cash Management Services
1.2.2. Account Reconcilement Services
An accounting process used to compare two sets of records to ensure the figures are in
2

agreement and are accurate. Reconciliation is the key process used to determine whether the
money leaving an account matches the amount spent, ensuring that the two values are
balanced at the end of the recording period. Any mismatch or anomalies are referred to as
breaks.
Balancing a checkbook can be a difficult process for a very large business, since it
issues so many checks it can take a lot of human monitoring to understand which checks have
not cleared and therefore what the company's true balance is. To address this, banks have
developed a system which allows companies to upload a list of all the checks that they issue
on a daily basis, so that at the end of the month the bank statement will show not only which
checks have cleared, but also which have not. More recently, banks have used this system to
prevent checks from being fraudulently cashed if they are not on the list, a process known as
positive pay.
1.2.3. Advanced Web Services
Most banks have an Internet-based system which is more advanced than the one
available to consumers. This enables managers to create and authorize special internal logon
credentials, allowing employees to send wires and access other cash management features
normally not found on the consumer web site.
Armored Car Services: Large retailers who collect a great deal of cash may have the
bank pick this cash up via an armored car company, instead of asking its employees to deposit
the cash.
1.2.4. Automated Clearing House
A clearing house can be simply described as an ‘electronic system’ that can be used to
transfer funds between funds. The financial institutions use this to make payments, especially
to employees (e.g. – direct deposit).
This involves the financial institution associating with an exchange, which settles
trades and regulates delivery. A bank-clearinghouse functions as an intermediary between
financial institutions.
Supposing, there are multiple transfers that are to be carried out from a Bank A, to
another bank, called Bank B and vice versa. In the likelihood of the absence of a clearing
house, each transaction would have to be individually carried out; in its stead, if both the
banks opt to use an interbank clearing house, then they can bundle the transactions which
allows them to handle them efficiently.
3

Making the decision to bank or even expand your operations overseas can be difficult.
One must navigate the international payments through the foreign banking system.
Examples of clearing houses


Clearing House Interbank Payments System (CHIPS) is an American clearing
house. It is held privately and caters primarily to large-value USD transactions both
domestically and internationally. Just to suggest a hint of the scale of its operation –
in a single day it allows settling well over US$1 trillion a day and around 250,000
interbank payments. CHIPS is held by a group of financial institutions. According to
the US regulations, "any banking organization with a regulated U.S. presence may
become an owner and participate in the network." Until 1998 however, in order to
participate in the CHIPS network, a financial institution was mandated to maintain
either a branch or an agency in New York City. A non-participant willing to make
international payments through CHIPS will then have to avail the services of one of
the participants into CHIPS, acting as its agent or correspondents. Usually the highvalue payments that are not time-sensitive are preferred to be sent by CHIPS instead
of Fedwire (It is another clearing house that is operated by the Federal Reserve
Banks, USA) as it is comparatively a cheaper means to carry out inter-bank
transactions and payments.



Fedwire funds Service – operated by the Federal Reserve’s Banks, the Fedwire
system allows fund-transfers between all its participants. It is preferred especially
for time-critical transfer and large-value payments; both, for domestic and
international markets. It is designed for very high degree of resilience and
redundancy. On an average the number of payments exceeded 500,000, even in
2007; and the total value was approximately over 2.7 trillion.



Euroclear – It is the largest central securities depository in the world. Specializing
in securities based transactions and its safe-keeping and asset servicing of these
securities. It settles security based transactions; both, International and domestic.
The products that are dealt with range from bonds, equities, derivatives and
investment funds. It also acts as the International Central Securities Depository
(ICSD) and Central Securities Depository (CSD) for many European countries
securities. It owns EMXCo (Leader in providing investment-fund order routing in
the UK) and TRAX (which is a trade matching and reporting system). It is owned

4

and governed by its users (market) and has acquired many other institutions. It is
one of the oldest settlement systems, conceived in the year 1968. Till the end of
2000, the Euroclear system was operated by the Belgian branch of the New York
state bank Morgan Guaranty Trust Company, of New York (MGT). MGT transferred
the operating activities to Euroclear bank in 2001. Its settlement and depositary
system, which is fully computerized, ensures the safe payment and delivery of
Eurobonds.
1.2.5. Balance Reporting Services
Corporate clients who actively manage their cash balances usually subscribe to secure
web-based reporting of their account and transaction information at their lead bank. These
sophisticated compilations of banking activity may include balances in foreign currencies, as
well as those at other banks. They include information on cash positions as well as 'float' (e.g.,
checks in the process of collection). Finally, they offer transaction-specific details on all
forms of payment activity, including deposits, checks, and wire transfers in and out, ACH
(automated clearinghouse debits and credits), investments, etc.
1.2.6. Lockbox services
Often companies (such as utilities) which receive a large number of payments via checks
in the mail have the bank set up a post office box for them, open their mail, and deposit any
checks found. This is referred to as a "lockbox" service.
1.2.7. Sweep Accounts
Sweep Accounts are typically offered by the cash management division of a bank. Under
this system, excess funds from a company's bank accounts are automatically moved into a
money market mutual fund overnight, and then moved back the next morning. This allows
them to earn interest overnight. This is the primary use of money market mutual funds.
1.2.8. Zero Balance Accounting
Zero Balance Accounting can be thought of as somewhat of a hack. Companies with
large numbers of stores or locations can very often be confused if all those stores are
depositing into a single bank account. Traditionally, it would be impossible to know which
deposits were from which stores without seeking to view images of those deposits. To help
correct this problem, banks developed a system where each store is given their own bank
account, but all the money deposited into the individual store accounts are automatically
5

moved or swept into the company's main bank account. This allows the company to look at
individual statements for each store. U.S. banks are almost all converting their systems so that
companies can tell which store made a particular deposit, even if these deposits are all
deposited into a single account. Therefore, zero balance accounting is being used less
frequently.

Figure 1.2.8-2 Zero Balance Accounting

1.2.9. Wire Transfer
A wire transfer is an electronic transfer of funds. Wire transfers can be done by a simple
bank account transfer, or by a transfer of cash at a cash office. Bank wire transfers are often
the most expedient method for transferring funds between bank accounts. A bank wire
transfer is a message to the receiving bank requesting them to effect payment in accordance
with the instructions given. The message also includes settlement instructions. The actual
wire transfer itself is virtually instantaneous, requiring no longer for transmission than a
6

telephone call.
1.2.10. Controlled Disbursement (Intraday)
This is another product offered by banks under Cash Management Services. The bank
provides a daily report, typically early in the day, that provides the amount of disbursements
that will be charged to the customer's account. This early knowledge of daily funds
requirement allows the customer to invest any surplus in intraday investment opportunities,
typically money market investments. This is different from delayed disbursements, where
payments are issued through a remote branch of a bank and customer is able to delay the
payment due to increased float time.
1.2.11. Cash Forecasting
Cash forecasting is backbone of cash planning. It forewarns a business regarding
expected cash problems, which it may encounter, thus assisting it to regulate further cash flow
movements. Lack of cash planning results in spasmodic cash flows.
Every business is interested in accelerating its cash collections and decelerating cash
payments so as to exploit its scarce cash resources to the maximum. There are techniques in
the cash management which a business to achieve this objective.
1.2.12. Profitable Deployment of Surplus Funds
Due to non-synchronization of cash inflows and cash outflows the surplus cash may
arise at certain points of time. If this cash surplus is deployed judiciously cash management
will itself become a profit Centre. However, much depends on the quantum of cash surplus
and acceptability of market for its short-term investments.
1.2.13. Economical Borrowings
Another product of non-synchronization of cash inflows and cash outflows is
emergence of deficits at various points of time. A business has to raise funds to the extent and
for the period of deficits. Raising of funds at minimum cost is one of the important facets of
cash management.
1.3. PURPOSE OF CASH MANAGEMENT
Cash management is the stewardship or proper use of an entity’s cash resources. It
serves as the means to keep an organization functioning by making the best use of cash or
liquid resources of the organization.
7

The function of cash management is threefold:


To eliminate idle cash balances. Every dollar held as cash rather than used to augment
revenues or decrease expenditures represents a lost opportunity. Funds that are not
needed to cover expected transactions can be used to buy back outstanding debt (and
cease a flow of funds out of the Treasury for interest payments) or can be invested to
generate a flow of funds into the Treasury’s account. Minimizing idle cash balances
requires accurate information about expected receipts and likely disbursements.



To deposit collections timely. Having funds in-hand is better than having accounts
receivable. The cash is easier to convert immediately into value or goods. A
receivable, an item to be converted in the future, often is subject to a transaction delay
or a depreciation of value. Once funds are due to the Government, they should be
converted to cash-in-hand immediately and deposited in the Treasury's account as
soon as possible.



To properly time disbursements. Some payments must be made on a specified or legal
date, such as Social Security payments. For such payments, there is no cash
management decision. For other payments, such as vendor payments, discretion in
timing is possible. Government vendors face the same cash management needs as the
Government. They want to accelerate collections. One way vendors can do this is to
offer discount terms for timely payment for goods sold.

1.4. NOTIONAL POOLING


Notional pooling is a mechanism for calculating benefit by compensating credit and debit
balances of accounts of a client, without actually transferring any funds.



Notional Pooling offered to multiple customer accounts in same country, maybe different
or same currencies are clubbed together in a single pool of accounts, so as to virtually
treat them as a single entity.



Credit value balances are offset against debit balances and the compensated balance is
used to work out the debit or credit benefit paid to customer. Also referred as ‘Interest
Optimization’.



Purpose is to Maximise Interest Earned and to Minimise Interest Paid



Notional pooling offered offsets credit and debit balances on a multi-currency basis
without the need to engage in any foreign exchange. Benefit from off-setting without
8

movement of funds and reduced operating expenses.
1.5. OBJECTIVES OF THE STUDY
1.5.1. Primary Objectives


To analysis the Customer Perception level and their expectation towards of Cash



Management services provided by banks.
To gain insights and compare the effectiveness of customized cash management
products/services offered in selective corporate banks to its clients.

1.5.2. Secondary Objectives


Comparative analysis of the selective banks about their customized products and services,




according to the customer needed.
To study the experience and expectations of the existing customers.
To study the scope of introducing new types of services.

1.6. SCOPE OF THE STUDY


The scope of the study is to analyse Customer Perception level and their



expectation towards of Cash Management services provided by banks
The study gathers information about rating the effectiveness and compare the
effectiveness of customized cash management products/services offered in



selective corporate banks to its clients.
The data was collected from the cash managers; secondary data was collected
from book manuals, magazines and websites.

9

CHAPTER 2
REVIEW OF LITERATURE

10

CHAPTER 2
REVIEW OF LITERATURE
2.1. REVIEW OF LITERATURE
A literature review is a text written by someone to consider the critical points of
current knowledge including substantive findings, as well as theoretical and
methodological contributions to a particular topic. Literature reviews are secondary
sources, and as such, do not report any new or original experimental work. Also, a
literature review can be interpreted as a review of an abstract accomplishment. Most
often associated with academic-oriented literature, such as a thesis or peer-reviewed
article, a literature review usually precedes a research proposal and results section. Its
main goals are to situate the current study within the body of literature and to provide
context for the particular reader. Literature reviews are a staple for research in nearly
every academic field.
2.2. REVIEW OF PREVIOUS STUDIES
This chapter discusses the theoretical framework, empirical review both covering
early studies covers 1980 to 1999 and the current studies covers 2000 to 2009. At the
end the summary of whole discussion has been provided.
Cash concepts
According to (Davidson et al, 1999), cash is any medium of exchange, which is
immediately negotiable. It must be free of restriction for any business purpose. Cash has
to meet the prime requirements of general acceptability and availability for instant use
in purchasing and payment of debt. Acceptability to a bank for deposit is a common test
applied to cash items. This is a process of Planning, controlling, and accounting for cash
transactions and cash balances. It is channeling available cash into expenditures that
enhance productivity, directly or indirectly.
In addition, Cash is ready money in the bank or in the business. It is not
inventory, it is not accounts receivable (what you are owed), and it is not property. These
might be converted to cash at some point in time, but it takes cash on hand or in the
bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not
necessarily mean more cash. (Davidson et al, 1999)

11

Cash management concepts
Waltson and Head (2007) explained Cash management as the concept which is
concerned with optimizing the amount of cash available, maximizing the interest earned
by spare funds not required immediately and reducing losses caused by delays in the
transmission of funds.
According to Zimmerer et al (2008) cash management is the process of
forecasting, collecting, disbursing, investing, and planning for cash a company needs to
operate smoothly. They further added that cash management is a vital task because it is
the most important yet least productive asset that a small business owns. A business
must have enough cash to meet its obligations or it will be declared bankrupt. Creditors,
employees and lenders expect to be paid on time and cash is the required medium of
exchange.
However, some firm retain an excessive amount of cash to meet any unexpected
circumstances that might arise. These dormant cash have an income-earning potential
that owners are ignoring and this restricts a firm’s growth and lowers its profitability.
Investing cash, even for a short time, can add to company’s earning. Proper cash
management permits the owner to adequately meet cash demands of the business, avoid
retaining unnecessarily large cash balances and stretch the profit generating power of
each dollar the business owns (Zimmerer et al, 2008).
In late 1980s authors played a great contribution in the concept of cash
management. Ross et al (1988:619) explained that cash management involves three
steps;
 Determining the appropriate target cash balance
 Collecting and disbursing cash efficiently
 Investing “ excess cash ‘ in marketable securities
 Determining the appropriate cash target balance involves an assessment of
the tradeoff between the benefits and cost of liquidity. The benefit of
holding cash is the convenience it gives the firm. A firm should increase
its holding cash until its present value from doing so is zero. The
incremental liquid value of cash should decline as more of it is held.

12

CHAPTER 3
METHODOLOGY

13

CHAPTER 3
METHODOLOGY
3.1. RESEARCH DESIGN
The Research is based on both Analytical and Descriptive Analysis.
The Analytical study would be dealt when the Comparative analysis of the selective
banks about their customized products and services to study the experience and expectations
of the existing customers.
Also, it would be a Descriptive study when the detailed study made scope of introducing
new types of cash management services and products.
3.2. POPULATION:
Survey conducted with known sixty Cash managers, treasurers and financial officers
worldwide who are associated with selected banks (HSBC, CITI, RBS and SCB). The survey
taken into non-financial institutions and financial institutions sections. Respondents are
asked to respond the questionnaire.
3.3. SAMPLE SIZE:
The sample size for this study is about 38 from total population of 60 who are familiar
with Cash management services and acting as cash manager for leading corporates.
3.4. SAMPLING TECHNIQUE
Convenience sampling method is used for the survey of this project. It is a nonprobability sample. This is the least reliable design but normally the cheapest and easiest to
conduct .In this method Researcher have the freedom to choose whomever they find, thus
the name convenience. Example includes informal pools of friends and neighbors or people
responding to a newspaper invitation for readers to state their position on some public issue
The Period of study is during the month of October 2014 and November 2014. Care was
taken to ensure completeness and accuracy in the data collected through Survey.

14

3.5. DATA COLLECTION METHOD
3.5.1. Primary Data
Cash managers, treasurers and financial officers worldwide. The survey taken
into non-financial institutions and financial institutions sections. Respondents are
asked to respond the questionnaire.
3.5.2. Secondary Data
Secondary data are those, which have already been collected by some other persons
for their purpose and published. Secondary data are usually in the shape of finished
products. Two types of secondary data were collected for the preparation of the project
work: Internal Data was generated from company’s brochures, manuals and annual
reports External Data, on the other hand, was generated from magazines, research books,
intranet and internet.
3.6. STATISTICAL TOOL
The study has used various statistical tools for the analysis of data. The data
collected can be interpreted by various statistical tools such as Percentage analysis, Chisquare test, and Pearson’s two-tailed correlation.
3.6.1. Percentage Analysis
To have a general idea on the opinion given by the respondents a simple percentage
analysis was carried out.
Test Statistics:
Percentage =

Number of Responses * 100
Number of Respondents

3.6.2. Two way Anova
The two-way ANOVA compares the mean differences between groups that have
been split on two independent variables (called factors). The primary purpose of a twoway ANOVA is to understand if there is an interaction between the two independent
variables on the dependent variable.

15

3.6.3. Weighted Average
An average in which each quantity to be averaged is assigned a weight. These
weightings determine the relative importance of each quantity on the average.
3.6.4. Bar Diagram:
Bar diagram is a popular form of diagrammatic representation. This diagram
consists of a series of rectangular bars standing on a common base.
The data collected from the different bank customers are represented in the tables
and Bar Diagram for better understanding.

3.7. LIMITATIONS


The study is limited to comparing the services offered in four selected Banks HSBC,
CITI, RBS and SCB.



Survey conducted only with 60 known cash managers of leading corporates.



The convenience sampling method is followed in selecting the respondents.
So the results of the study may be biased.



The data collected from the customer are qualitative in nature i.e., views
perception, satisfaction, opinion. May change from time to time

16

CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

17

CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
4.1. DATA ANALYSIS AND INTERPRETATION
Table 4.1-1: Approximate Annual Turnover of the Business
Options

No of respondent

Percentage %

<20,00,000

9

24%

20,00,000-50,00,000

14

37%

50,00,000-80,00,000

8

21%

80,00,000-100,00,000

5

13%

>100,00,000

2

5%

38

100%

Total

Chart 4.1-1: Chart on Approximate Annual Turnover of the Business

5.
6.
Interpretation
24% of the respondents’ annual turnover is less than 20,00,000, 37% respondents are earning
20,00,000-50,00,000, 24% of them comes under 50,00,000-80,00,000, 13% of them comes
under 80,00,000-100,00,000 and the rest 5% of the respondents’ turnover is more than
100,00,000

18

Table 4.1-2: Table Showing Bank chosen for ICM Services
Options

No of respondents

Percentage %

Standard Chartered Bank

9

24%

HSBC Bank

11

29%

CITI Bank

10

26%

RBS Bank

8

21%

38

100%

Total

Chart 4.1-2: Chart Showing Bank chosen for ICM Services

Interpretation
24% of the respondents chosen Standard Chartered Bank for ICM services, 29% chosen HSBC
Bank, 26% chosen CITI Bank, 21% of them chosen RBS bank

19

Table 4.1-3: Table showing Bank’s Cash Management Service Rating

Quality of personnel

1
4

2
3

3
9

4
9

5
13

Total
38

Industry expertise & knowledge

14

4

8

12

0

38

Advisory services

6

7

17

6

2

38

Quality of execution

8

19

8

3

0

38

Innovative/Tailored business solutions

9

2

7

18

2

38

Level of commitment to your cash management
business

11

7

15

1

4

38

Understanding of your business

7

7

16

4

4

38

Cash management network capabilities

4

8

21

4

1

38

Liquidity/Credit facilities

8

18

7

5

0

38

Implement netting/In-house banking

2

11

15

7

3

38

Payment/collection methods

7

0

19

11

1

38

Multi-currency capabilities

9

10

6

12

1

38

Cross-border low value payments

15

17

3

3

0

38

Access to all applicable clearing systems

3

14

3

18

0

38

Cash flow forecasting capabilities

4

14

4

16

0

38

Compatibility with your own systems

3

10

9

16

0

38

Quality of electronic banking security

3

12

8

12

3

38

Electronic banking applications

2

3

29

3

1

38

Terms

Chart 4.1-3: Chart Showing Bank's Cash Management Service Rating

20

Interpretation on Cash Management Services Rating:
Majority of the respondents ranked quality of personnel as 5; as far industry expertise &
knowledge most of them ranked 1, Advisory services are ranked as 3, Quality of execution are
ranked as 2, Innovative/Tailored business solutions are ranked as 4, Level of commitment to
cash management business are ranked as 3, Understanding of business are ranked as 3, Cash
management network capabilities are ranked as 3, Liquidity/Credit facilities are ranked as 2,
Implement netting/In-house banking are ranked as 3, Payment/collection methods are ranked as
3, Multi-currency capabilities are ranked as 4, Cross-border low value payments are ranked as 2,
Access to all applicable clearing systems are ranked as 4, Cash flow forecasting capabilities are
ranked as 4, Compatibility with your own systems are ranked as 4, Quality of electronic banking
security are ranked as 2 & 4, Electronic banking applications are ranked as 3

TWO FACTOR ANOVA DATA ANALYSIS:
21

To find the effect of two nominal predictor variables such as “Bank of the respondent” and
“Service Rating Category” on a continuous outcome variable “Respondent Rating”. A two-way
ANOVA test analyzes the effect of the independent variables on the expected outcome along
with their relationship to the outcome itself.
Null Hypothesis:
H01 = There is no significant effect from the “Bank” factor on the response of the respondents.
H02 = There is no significant effect from the “Service Rating Category” factor on the Levels of
satisfaction of the respondents.
Alternate Hypothesis:
H1 = There is a dependency between the bank they are using currently for their cash management
services and Respondents service rating across various service categories
From the data collected to rate their cash manager on a sliding scale of 1=V Poor to
5=Excellent across various service categories. Below are the collected categorized data for each
bank all the responses collated based on the service-rating.

BANK
HSBC
CITI
SCB
RBS

5

4
23
9
2
1

3
63
48
35
14

2
78
58
42
28

1
33
46
44
45

1
19
39
57

Note: For the hypothesis, a 95% confidence level is used. This means you can be sure that 95%
of the time the result is actually correct. And it has a 5% risk of arriving at a false conclusion.
Anova: Two-Factor
SUMMARY
HSBC
CITI
SCB
RBS
SA
A
N
DA
SDA

Count
5
5
5
5

Su
m
198
180
162
145

4
4
4
4
4

35
160
206
168
116

Average Variance
39.6
957.8
36
436.5
32.4
300.3
29
512.5
8.75
40
51.5
42
29

102.9167
431.3333
462.3333
36.66667
589.3333
22

ANOVA
Source of Variation
Bank of the
respondent
Service Rating
Category
Error
Total

SS

df

313.35
4274
4554.4
9141.75

MS
3

F

P-value

F crit

104.45 0.275206 0.842175 3.490295

4
1068.5 2.815299 0.073601 3.259167
12 379.5333
19

INFERENCE:
There are two null hypotheses: one for the “Bank of the respondent” and the other for the
“Service Rating Category”:
H01 = There is no significant effect from the “Bank” factor on the response of the
respondents.
Since the p-value for the rows = .8421 > .05 = α (or F = 0.27 < 3.49 = F-crit) we can’t reject the
null hypothesis, and so at the 95% level of confidence we conclude there is no significant
difference in responses received based on the bank of the respondents.
H02 = There is no significant effect from the “Service Rating Category” factor on the
response of the respondents.
Since the p-value for the columns = .073 > .05 = α (or F = 2.81 > 3.21 = F-crit) we can’t reject
the null hypothesis, and so at 95% level of confidence we conclude there is no significant
difference in Service Rating Category.

23

WEIGHTED AVERAGE:
From the data collected to rate their cash manager on a sliding scale of 1=V Poor to 5=Excellent
across various service categories. In the lead categories, each voter’s score across all service
categories are consolidated. Each voter’s final score is then weighted depending on the annual
turnover of the part of the business for which the voter is responsible, as follows:
1.
2.
3.
4.
5.

Greater than $100,00,000 – a Weight factor of ‘5’ is applied
Between $80,00,000 to 100,00,000 - a Weight factor of ‘4’ is applied
Between $50,00,000 to 80,00,000 - a Weight factor of ‘3’ is applied
Between $20,00,000 to 50,00,000 - a Weight factor of ‘2’ is applied
Lower than $20,00,000 - a Weight factor of ‘1’ is applied

Based on the weighted average calculation method, final score is then weighted depending on
the annual turnover of the part of the business for which the voter is responsible, and final score
of the bank achieved from that:
BANK
HSBC
CITI
SCB
RBS

Weighted Average
3.539215686
3.04589372
2.563888889
1.896825397

Inference:
Based on the calculation results, Respondents have voted HSBC the number one international
cash manager, CITI Bank was ranked second for ICM services, SCB ranked as third and RBS as
fourth best ICM provider.

24

Table 4.1-4: Table Showing Number of Banks Accounts maintained
Options

No of respondent

Percentage %

1 – 10

1

3%

11 – 25

1

3%

26 – 75

12

32%

76 – 150

15

38%

150+

9

24%

38

100%

Total

Chart 4.1-4: Chart Showing Number of Banks Accounts Maintained

Interpretation:
3% of the respondents are maintaining 1-10 bank accounts, 3% of them are holding 11-25
accounts, 32% of them are holding 26-75 accounts, 38% are holding 76-150 accounts, and 24%
of them are maintaining more than 150 accounts

25

Table 4.1-5: Table showing intention to change the number of ICM providers
Options

No of respondent

Percentage %

Yes

1

3%

No

30

79%

Don’t Know

7

18%

38

100%

Total

Chart 4.1-5: Chart showing intention to change the number of ICM providers

Interpretation
3% of the respondents are said yes and 79% of the respondents are said no and 18% of them said
they don’t’ know about their intention to change the number of ICM providers

26

Table 4.1-6: Table Showing Main Reason for Changing ICM Provider
Options

No of respondent

Percentage %

Poor overall service
Personnel change at bank

1

100%

Rating downgrade of bank

0

0%

Others

0

0%

1

100%

Total

Chart 4.1-6: Table Showing Main Reason for Changing ICM Provider

Interpretation
100% of the respondents said the reason for change in ICM provider due to poor service

27

Table 4.1-7: Table Showing Usage of a Common Electronic Bank Billing Format
Options

No of respondent

Percentage %

Yes

38

100%

No

0

0%

Don’t Know

0

0%

Total

38

100%

Chart 4.1-7: Chart showing Usage of a Common Electronic Bank Billing Format

Interpretation
100% of the respondents are said yes for usage of electronic bank billing format by their banks

28

Table 4.1-8: Table Showing Cash Management/Transaction Provided With Adequate
Transparency and Accuracy
Options

No of respondent

Percentage %

Yes

18

47%

No

11

29%

Don’t Know

9

24%

38

100%

Total

Chart 4.1-8: Chart Showing Cash Management/Transaction Provided With Adequate
Transparency and Accuracy

Interpretation: 18% of the respondents are said yes and 11% of the respondents said no and
24% of the, said they are not aware of the cash management/transaction provided with adequate
transparency and accuracy

29

Table 4.1-9: Table showing kind of ICM Services used to Manage Cash
Options

No of respondent

Percentage %

Cash concentration services

20

53%

Notional Pooling services

11

29%

Automatic Balance Transfer

14

37%

Cash Forecasting Services

18

47%

High yield Investment Services

15

39%

Others

2

5%

38

100%

Total

Chart 4.1-9: Chart showing kind of ICM services used to manage Cash.

Interpretation: 53% of the respondents said cash concentration is used for managing cash in
ICM services, 29% of the respondents said notional pooling services, 37% of the respondents
using Automated Balance Transfer, 47% of the respondents using zero balancing accounting and
39% said high yield investment services.

Table 4.1-10: Table Showing Type of Investment made in Bank
30

Options

No of respondent

Percentage %

Bank Fixed Deposit (Term Deposit)

12

32%

Deposits- Saving Account

19

50%

Market Based Investment Accounts

15

39%

Company Fixed Deposit

8

21%

Others

8

21%

38

100%

Total

Chart 4.1-10: Table showing Type of Investment made in Bank

Interpretation
32% of the respondents said Bank fixed deposit is made in bank, 50% said savings account, 39%
said market based investment accounts, 21% said company fixed deposit and 21% respondents
using other type investment accounts which is not listed.

31

Table 4.1-11: Table showing easiest ways to verify the Account Balance
Options
Internet banking

No of respondent
12

Percentage %
32%

SMS Alerts

1

3%

Reporting Services over Email

11

29%

Mobile Banking

14

37%

Others

0

0%

38

100%

Total

Chart 4.1-11: Chart showing easiest ways to verify the Account Balance

Interpretation
37% of the respondents said the easiest way to obtain account balance is mobile banking, 32%
of the respondents prefer internet banking, 29% said reporting services over email and only 3%
of the respondents preferring SMS Alerts.

32

Table 4.1-12: Table showing Rating on Effectiveness of Cash Management Services
Offered in Modern Days
Services
Zero balance accounting/Cash Concentration
Notional Pooling
Automated Balance Transfer

1
2
10
1

2
7
9
5

3
8
14
10

4
9
3
17

5
12
2
5

Total
38
38
38

Investment Products/Services

1

6

8

14

9

38

Term Deposits

3

14

15

2

4

38

Advanced Reporting Services

11

16

5

4

2

38

Forecasting Services

11

14

9

3

1

38

Overall satisfaction level on each services
Services
Zero balance accounting/Cash
Concentration
Notional Pooling

Average Score
obtained
3.58
2.42

Automated Balance Transfer

3.53

Investment Products/Services

3.63

Term Deposits

2.74

Advanced Reporting Services

2.21

Forecasting Services

2.18

Chart 4.1-12: Chart showing Rating on Effectiveness of Cash Management Service
Offered in Modern Days

33

Overall Satisfaction Provided by Main Banking Partners for Each Service: (5 Scale
Rating)

Interpretation
Rating on effectiveness of cash management service offered in modern days
Majority of the respondents voted Investment Products/Services as most effective for their
business, Cash concentration also equally effective and it’s considered as best by majority of the
respondents, Automated clearing house facilities also rated highly after Investment and cash
concentration services,
Note also the low level of satisfaction in bank-provided cash forecasting services and Reporting
Services.

34

Table 4.1-13: Table showing Comfortable Risk/Return Scenario
Options

No of respondent

Percentage %

Low risk/return

7

18%

Moderate risk/return

23

61%

Above Average risk/return

5

13%

High risk/return

3

8%

Other

0

0%

38

100%

Total

Chart 5.13: Chart showing Comfortable Risk/Return Scenario

Interpretation
18% of the respondents are said they feel comfortable with low risk and low return scenario,
61% said moderate risk and return scenario, 13% said above average risk and return, 8% said
high risk/return scenario.

35

Table 4.1-14: Table showing Better Control of Cash Positions
Options

No of respondent

Percentage %

No

28

74%

Yes

10

26%

38

100%

Total

Chart 4.1-14: Chart showing Better Control of Cash Positions

Interpretation:
74% of the respondents said they don’t have better control over cash positions, 26% said they
have better control.

36

Table 4.1-15: Table showing Top Challenges to Cash Management Process Efficiency
Options

No of respondent

Percentage %

Lack of Streamlined Operational Processes

7

18%

Labour-Intensive Administrative Work

5

13%

Inadequate Information and Reporting
Capabilities

13

34%

Sluggish Cash Flow Movement

5

13%

Poor Cash Position Visibility

8

22%

38

100%

Total

Chart 4.1-15: Chart showing Top Challenges to Cash Management Process Facility

Interpretation: 18% of the respondents said Lack of Streamlined Operational Processes as top
challenge to cash management process efficiency, 13% said labour-Intensive Administrative
Work, 61% said inadequate information and reporting capabilities, 13% said Sluggish Cash
Flow Movement, 47% said Poor Cash Position Visibility

37

Table 4.1-16: Table showing Awareness of Penalties to make Cash available
At Short Notice
Options

No of respondents

Percentage %

Yes

15

39%

No

23

61%

38

100%

Total

Chart 4.1-16: Chart showing Awareness of Penalties to make Cash available
At Short notice

Interpretation: 39% of them said they have awareness of penalties to make cash available at
short notice, 61% said no.

38

Table 4.1-17: Table showing preferred Channels to access Banking Services
Options

No of respondents

Percentage %

Single integrated bank portal

25

66%

Multiple portals

3

8%

Via SWIFT solution

5

13%

Mobile apps

14

37%

Treasury workstation or host-to-host

1

3%

Total

38

100%

Chart 4.1-17: Chart showing preferred channels to access Banking Services

Interpretation
66% of the respondents are prefer Single integrated bank portal channel to access banking
services, 8% prefer multiple portals, 13% said Via SWIFT solution, 37% said Mobile apps, 3%
Treasury workstation or host-to-host

39

Table 4.1-18: Table showing Investment Banking Product most familiar with
Options

No of respondents

Percentage %

Growth Deposit Account

23

60%

Equity underwriting

9

24%

Term Deposits

5

13%

Yield Call Deposit Account

1

3%

Others

0

0%

38

100%

Total

Chart 4.1-18: Chart showing Investment Banking Product most familiar with

Interpretation
60% of the respondents said they are familiar with Growth Deposit Account, 24% said equity
underwriting, 13% said term deposits, 3% said yield call deposit account.

40

Table 4.1-19: Table showing ICM Services given more Importance by the Bank
Options

No of respondent

Percentage %

Forecasting Services

10

26%

Advanced Reporting Services

8

21%

Zero Balancing Services

18

47%

Notional Pooling

13

34%

Company Loans

5

13%

Investment Products

15

39%

Other

0

0%

38

100%

Total

Chart 4.1-19: ICM Services given more Importance by the Bank.

Interpretation:
47% of the respondents said Zero Balancing Services given more importance by the bank recent
years, 39% of the respondents said Investment Services, 34% said Notional Pooling, 26% said
Forecasting Services and 21% said Advances Reporting Services.

41

Table 4.1-20: Table showing satisfaction with the Charges imposed by Banks for not
maintaining the Minimum Balance
Options

No of respondent

Percentage %

Highly Satisfied

0

0%

Satisfied

1

3%

Neutral

32

84%

Dissatisfied

4

10%

Highly Dissatisfied

1

3%

38

100%

Total

Chart 4.1-20: Chart showing satisfaction with the Charges imposed by Banks for not
maintaining the Minimum Balance

Interpretation:
3% of the respondents are satisfied with the charges imposed by banks for not maintaining the
minimum balance, 84% of them neither satisfied nor dissatisfied, 10% of them are dissatisfied
and rest 3% are highly dissatisfied

42

Table 4.1-21: Table showing Opinion about the Cash Management Services in Bank
Services
Less service fee collected for cash management
services
It provides 24x7 reporting services, anywhere,
anytime service
Reduces penalty incurred for over drafting/debit
balances
Better forecasting of market trends to avoid losses
Easy mode of cash deposit and withdrawal

SA A

N

3

5

14

4

2

23

13
3
3

17 4
13 17
8 21

DA SDA Total
38
4
12
38
5
4
38
2
2
4
1
38
4
2
38

Chart 4.1-21: Table showing Opinion about the Cash Management Services in Bank

Interpretation: Opinion on cash management services
Majority of them neither agree nor disagree with less service fee collected for cash management
services, 24x7 reporting services, anywhere, anytime service, better forecasting of market trends
to avoid losses and easy mode of cash deposit and withdrawal and majority agree with the
reduced penalty incurred for over drafting/debit balances

43

Table 4.1-22: Table showing strategy to control Customer Erosion from Banks
Options

No of respondent

Percentage %

Keep the bank in the easy reach of

3

8%

customers
Customer Friendly
Transparent cash managing techniques
Less fee on transactions
Other
Total

22
12
1
0
38

58%
31%
3%
0%
100%

Chart 4.1-22: Chart showing strategy to control Customer Erosion from Banks

Interpretation:
8% of the respondents sad to keep the bank in the easy reach of customers to control customer
erosion from banks, 58% said customer friendliness, 31% said transparency in cash
management techniques and 3% said to reduce fee on transactions

44

Table 4.1-23: Table showing Reason behind choosing the Bank for holding Accounts
Services
Excellent service quality
Using latest technology, which enables
anytime service
Less Service Fee
Introducing new cash management products
Reliable Forecasting of Cash needs
Advanced Reporting Services

SA A N DA SDA Total
4
15 14 3
2
38
38
6
22 5 4
1
1
14 17 5
1
38
2
13 17 3
3
38
2
18 12 1
5
38
1
12 22 1
2
38

Chart 4.1-23: Chart showing Reason behind choosing the Bank for holding Accounts

Interpretation:
Majority respondents agree with excellent service quality, using latest technology, which enables
anytime service, reliable forecasting of cash needs as reasons for choosing a bank for holding
accounts, and majority neither agree nor disagree with less service fee, introducing new cash
management products and advanced reporting services

45

Table 4.1-24: Table showing Bank is providing Single point of Access to Customers
Options

No of respondent

Percentage %

Strongly Agree

3

8%

Agree

10

26%

Neutral

6

16%

Disagree

15

39%

Strongly Disagree

4

11%

Total

38

100%

Chart 4.1-24: Chart showing Bank is providing Single point of Access to Customers

Interpretation: 8% of the respondents strongly agree that are the bank is providing single point
of access to customers, 26% agree this, 16% neither agree nor disagree with this, 39% disagree
with this and 11% strongly disagrees that single point access is provided by their bank to
manage ICM services

46

Table 4.1-25: Table showing satisfaction level with the Cash Management services in Bank
Options

No of respondent

Percentage %

Excellent

1

3%

Very Good

6

15%

Good

19

50%

Average

8

21%

Poor

4

11%

38

100%

Total

Chart 4.1-25: Chart showing level of satisfaction with the
Cash Management Services in Bank.

Interpretation: 3% of the respondents said their level of satisfaction with the cash management
services in bank is excellent, 15% said very good, 50% said good, 21% said average and 11%
said poor.

47

CHAPTER 5
CONCLUSION

48

CHAPTER 5
CONCLUSION

5.1. FINDINGS OF THE STUDY
CUSTOMER PERCEPTION LEVEL ON ICM PROVIDERS:


Respondents have voted HSBC the number one international cash manager because of
their best quality of service, innovative business solutions, and multi-currency
capabilities across the globe and for understanding the customer business well.



CITI Bank was ranked second for ICM services, respondents quite happy about Quality
of personnel in the bank, Quality of electronic banking security and compatibility to all
applicable clearing systems to make the transactions more quick and cheap however
some of the respondents rated CITI low because of their inability to Liquidity/Credit
facilities in the market.



Standard Chartered Bank ranked as third ICM provider; respondents ranked positively
for their Cash flow forecasting capabilities and techniques but most of them feels that
their services like Cross-border low value payments and Level of commitment to your
cash management business is very low compared to the other ICM providers.



RBS is considered fourth in ICM service offerings arena because lack of Industry
expertise & knowledge, in effective Payment/collection methods and poor quality of
Quality of electronic banking security.



Majority of the respondents very satisfied with quality of personnel in the bank; as far
industry expertise & knowledge most of them dissatisfied with the service
Majority of the respondents satisfied with below services of their ICM provider:
 Cash Forecasting capabilities and reporting techniques
 Quality of electronic banking security
 Access to all applicable clearing systems
 Implementation of netting/In-house banking
Majority of the respondents not satisfied with below mentioned services of their
ICM provider:
 Level of commitment to your cash management business
 Liquidity/Credit facilities

49

 Unviability of Cross-border low value payments
EFFECTIVENESS OF CASH MANAGEMENT PRODUCTS


Majority of the respondents voted Investment Products/Services as most effective for
their business, Cash concentration also equally effective and it’s considered as best by
majority of the respondents, Automated clearing house facilities also rated highly after
Investment and cash concentration services,



Note also the low level of satisfaction in bank-provided cash forecasting services and
Reporting Services.



3% of the respondents are maintaining 1-10 bank accounts, 3% of them are holding 1125 accounts, 32% of them are holding 26-75 accounts, 38% are holding 76-150 accounts,
and 24% of them are maintaining more than 150 accounts.
Since most of the respondents maintain more than 100 accounts globally for their
business there is a strong need of Cash Concentration services for transferring single
currency positions from multiple accounts to their single master account to have better
control of their cash positions.



47% of the respondents said Zero Balancing Services given more importance by their
bank recent years, 39% of the respondents said Investment Services, 34% said Notional
Pooling, 26% said Forecasting Services and 21% said Advances Reporting Services.
ICM services providers can improve the level of client satisfaction in a number of
areas, notably with improvement in the areas of cash forecasting and advanced reporting
services, both of which are important to corporate practitioners and much needed
nowadays.

AREAS FOR SERVICE IMPROVEMENT


100% of the respondents are said yes for usage of electronic bank billing format by their
banks.
There is overwhelming demand among institutions for electronic bank billing, which is
the one area that should be considered by the ICM providers.



37% of the respondents said the easiest way to obtain account balance is mobile banking,
32% of the respondents prefer internet banking, 29% said reporting services over email
and only 3% of the respondents preferring SMS Alerts.

50

There is strong demand raising from customers that all the services should be offered in
Mobile Solutions. While most banking partners do provide some mobile services, the
breadth of such service offerings varies. Payments solutions are very common, as are
cash management services, but relatively few banking service providers have expanded
their mobile platforms to other service areas such as trade finance or foreign exchange
(FX).


66% of the respondents are prefer Single integrated bank portal channel to access
banking services, 8% prefer multiple portals, 13% said Via SWIFT solution, 37% said
Mobile apps, 3% Treasury workstation or host-to-host.



3% of the respondents strongly agree that are the bank is providing single point of access
to customers, 5% agree this, 89% neither agree nor disagree with this and 3% disagree
with this.
While a single integrated bank portal is the most commonly used one and it’s preferred
by most of the respondents, two in five respondents indicate that a “Mobile
Applications” would be the preferred form of access.

CHALLENGES FOR BANKS


18% of the respondents said Lack of Streamlined Operational Processes as top challenge
to cash management process efficiency, 13% said labour-Intensive Administrative Work,
61% said inadequate information and reporting capabilities, 13% said Sluggish Cash
Flow Movement, 47% said Poor Cash Position Visibility



3% of the respondents are said yes and 79% of the respondents are said no and 18% of
them said they don’t’ know about their intention to change the number of ICM providers
in that 100% of the respondents who is willing ti change the provider said the reason for
change in ICM provider due to “Poor service”



39% of them said they have awareness of penalties to make cash available at short
notice, 61% said they don’t have awareness.



3% of the respondents are satisfied with the charges imposed by banks for not
maintaining the minimum balance, 84% of them neither satisfied nor dissatisfied, 10% of
them are dissatisfied and rest 3% are highly dissatisfied



Opinion on cash management services -Majority of them neither agree nor disagree with
less service fee collected for cash management services, 24x7 reporting services,
anywhere, anytime service, better forecasting of market trends to avoid losses and easy
51

mode of cash deposit and withdrawal and majority agree with the reduced penalty
incurred for over drafting/debit balances

5.2. SUGGESSTION & RECOMMENDATIONS:
The following are the suggestions given to banks providing international cash management
services to corporates:


To match the increasing demand of corporate practitioners’ on Cash forecasting
services and Reporting Services, bank should think of introducing new products on
those areas to match customer demand.



Banks have recently invested heavily in Mobile technology solutions, but the survey
results suggest that corporate practitioners places concerns on these capabilities when
selecting a banking partner. Corporate practitioners expect all banks to offer mobile
technology so banks should invest more on mobile technologies to differentiate
themselves in this area.



Given the level of interest by the corporate practitioners in single integrated bank portal
to access all the banking services, the level of consideration by the providers to migrate
to Single integrated bank portal from Multi bank portal is less. To provide ease of access
to corporate practitioner, bank should consider to upgrade their technology to provide
Single integrated bank portal.



Improve operational efficiency by eliminating the multiple banks involvement in
moving funds, and reduce payment transfers and FX sweeps costs by providing access
to all global clearing and disbursement houses.



Majority of the respondents feels that service fee collected for ICM products are
relatively high so bank should consider reducing service charges, and lower interest
charges on overdraft.

5.3. CONCLUSIONS:
Generally speaking the treasury department of a multi-national enterprise (MNE) seeks
to maximize the return on surplus cash and minimize the cost of financing cash deficits, and
furthermore to mitigate the interest rate, currency and other financial risks. Quite apart from
ensuring the smooth and efficient processing of domestic and foreign payments and the
financial transactions associated with cross-border trade, centralized cash management is a

52

challenging task for companies operating worldwide, they need effective cash management
products provided by banking partners and it should be best positioned to provide them with
the best control over their cash operations.
The report fulfills the aim of giving a brief on effectiveness of cash management services
provided by banks for Corporates and to analysis the Customer Perception level and their
expectation towards of Cash Management services provided by banks and to gain insights
and compare the effectiveness of customized cash management products/services offered in
selective corporate banks to its clients.
Banking services providers can improve the level of client satisfaction in a number of
areas, notably with improvement in the areas of cash forecasting and regulatory advice, both
of which are important to corporate practitioners. Banks should ask themselves—and their
clients— what is required to provide best ICM services.

5.4. SCOPE FOR FUTURE RESEARCH
The results and findings of this research study exemplifies the fact that an in-depth
research has been conducted. However, the study had some limitations also such as lack of
time, lack of data, non-response, reluctant attitude and illiteracy of respondents, which posed
problems in carrying out the research. Survey questionnaire shared to 60 cash managers,
treasurers and financial officers worldwide in which we got the response only from 38 of the
respondents. In future this research can be extended to more number of respondents and
regions to find the effectiveness more accurately.

53

APPENDIX 1 - QUESTIONARIE
*** MBA Final Project Survey ***
Project Title:
COMPARATIVE ANALYSIS OF CASH MANAGEMENT SERVICES OFFERED BY BANKS
AND IT’S EFFECTIVENESS TOWARDS CORPORATE BUSINESS
Respondents (cash managers, treasurers and financial officers) are asked to provide their
responses for the below mentioned questionnaires related to cash management services.
Responses are collected using online forms and emails.
1. What is the approximate annual turnover of the business (in EUR)?
 <20,00,000
 20,00,000-50,00,000
 50,00,000-80,00,000
 80,00,000-100,00,000
 >100,00,000
2. In which bank do you opted for ICM services?
 Standard Chartered Bank
 HSBC Bank
 CITI Bank
 RBS Bank
 Others, specify ________________
3. How do you rate this bank's cash management service in terms of:
5-point scale Rating (Poor 1 2 3 4 5 Excellent)
Terms

1

2

3

4

5

Quality of personnel
Industry expertise & knowledge
Advisory services
Quality of execution
Innovative/Tailored business solutions
Level of commitment to your cash management
business
Understanding of your business
Cash management network capabilities
Liquidity/Credit facilities
Implement netting/In-house banking
Payment/collection methods
Multi-currency capabilities
54

Cross-border low value payments
Access to all applicable clearing systems
Cash flow forecasting capabilities
Compatibility with your own systems
Quality of electronic banking security
Electronic banking applications
4. Number of Banks Accounts Used or Maintained?
 1 – 10
 11 – 25
 26 – 75
 76 – 150
 150+
5. Over the next year, do you intend to change the number of ICM providers you use?
 Yes
 No
 Don’t know
6. What would be the main reason behind you changing your ICM provider?
 Poor overall service Personnel change at bank
 Rating downgrade of bank
 if 'other (please specify) ________________
7. Do you want to see universal use of a common electronic bank billing format such
as Bank Service Billing or similar?
 Yes
 No
 Don't know
8. Do you believe that your core group of cash management/transaction banks provide
you with adequate transparency and accuracy around their banking service fees?
 Yes
 No
 Don't know
9. What kind of ICM services you opted to manage your cash?
 Cash concentration services
 Notional Pooling services
 Automatic Balance Transfer
 Cash Forecasting Services
 High yield Investment Services
 Others, specify ________________

10. What type of investments you have made in bank?
 Bank Fixed Deposit (Term Deposit)
 Deposits- Saving Account
 Market Based Investment Accounts
 Company Fixed Deposit
 Others, specify __________________
55

11. What are the easiest ways to obtain your account balance?
 Internet banking
 SMS Alerts
 Reporting Services over Email
 Mobile Banking
 Others, specify __________________
12. What do you rate the EFFECTIVENESS of cash management service offered in
Modern days?
(Rank, 1 = Most Preferred; 2= Preferred; 3= Neutral; 4=Less Preferred; 5=Useless)
Services
Zero balance accounting

1

2

3

4

5

Notional Pooling
Automated clearing house facilities
Investment Products/Services
Easy mode of cash deposit and withdrawal
Term Deposits
Advanced Reporting Services
Forecasting Services
13. Which risk/return scenario you would be most comfortable with?
 Low risk/return (max return 6% pa & min return 3% pa)
 Moderate risk/return (max return 8% pa & min return 5% pa)
 Above Average risk/return (max return 12% pa & min return 10% pa)
 High risk/return (max return 25% pa & min return 20% pa)
 Other, _________________________
14. Do you have better control of your cash positions?
 No
 Yes
15. Top Challenges to Cash Management Process Efficiency?
 Lack of Streamlined Operational Processes
 Labour-Intensive Administrative Work
 Inadequate Information and Reporting Capabilities
 Sluggish Cash Flow Movement
 Poor Cash Position Visibility
16. Are you aware of the penalties you would need to incur to make your cash available
at short notice?
 Yes
56



No

17. Preferred channels to access their banking services?







Single integrated bank portal
Multiple portals
Via SWIFT solution
Mobile apps
Treasury workstation or host-to-host

18. Which of the investment banking product are you most familiar with?
 Growth Deposit Account
 Equity underwriting
 Term Deposits
 Yield Call Deposit Account
 Others, Specify __________________
19. Which of these following ICM services is given more importance (marketed) in your
bank for effective Cash Management?
 Forecasting Services
 Advanced Reporting Services
 Zero Balancing Services
 Notional Pooling
 Company Loans
 Investment Products
 Other _________________
20. Are you satisfied with the charges imposed by Banks for not maintaining the
minimum balance?
 Highly Satisfied
 Satisfied
 Neutral
 Dissatisfied
 Highly Dissatisfied
21. What is your opinion about the Cash Management Services in your Bank?
(Being SA=Strongly Agree; A=Agree; N=Neither Agree nor Disagree; D=Disagree;
SD=Strongly Disagree)
Services
Less service fee collected for cash management
services
It provides 24x7 reporting services, anywhere, anytime
service
Reduces penalty incurred for over drafting/debit

SA

A

N

DA SDA

57

balances
Better forecasting of market trends to avoid losses
Easy mode of cash deposit and withdrawal

22. What strategy must be followed to control customer erosion from banks?
 Keep the bank in the easy reach of customers
 Customer Friendly
 Transparent cash managing techniques
 Less fee on transactions
 Others, specify __________________
23. Reason behind choosing the bank for holding your accounts?
(Being SA=Strongly Agree; A=Agree; N=Neither Agree nor Disagree; D=Disagree;
SD=Strongly Disagree)
Services
Excellent service quality
Using latest technology, which enables anytime service
Less Service Fee
Introducing new cash management products
Reliable Forecasting of Cash needs
Advanced Reporting Services

SA

A

N

DA SDA

24. Bank is providing single point of access to customers – comment
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree

25. Rate the level of satisfaction with the cash management services in bank?
 Excellent
 Very Good
 Good
 Average
58



Poor

REFERENCES
Books:
 Moorad Choudhry, An Introduction to Banking: Liquidity Risk and Asset-Liability
Management
 Ruth Wandhöfer, Transaction Banking and the Impact of Regulatory Change
 Lex van der Wielen International Cash Management
Journal References:
 30th_Annual_Cash_Management_Services_Survey (EY Cash Management Services)
 EuroMoney cash management report
E-References:
 www.hdfc/india.com
 www.rbs.com
 www.scb.co.in
 www.hsbc.com
 Investopedia
 Referred to Book CASH MANAGEMENT MADE EASY for better understanding of the
concept

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