Bank of America aims to grow corporate cash management with new tool

An individual walks previous a Financial institution of America signal within the Manhattan borough of New York Metropolis, New York, U.S., January 19, 2022. REUTERS/Carlo Allegri/File Picture GLOBAL BUSINESS WEEK AHEAD

NEW YORK, June 14 (Reuters) – Financial institution of America (BAC.N) is rolling out a brand new money administration instrument to U.S.-based shoppers, it stated on Tuesday, in a bid to realize market share within the $300 billion money administration enterprise for multi-national companies.

Transaction banking – which covers processing worker payroll, paying suppliers and gathering from prospects – contributed roughly 8% of the financial institution’s whole 2021 income, or $7.23 billion.

The second-largest U.S. financial institution stated it was extending its digital account administration (VAM) instrument – already obtainable in Europe – to america, the place the COVID-19 pandemic has accelerated prospects’ use of digital funds.

The instrument helps firms handle a number of accounts by making a digital ledger, accessible on-line, that exhibits all their account balances and transactions, and may mannequin future money move. The instrument may be opened and used inside a day, whereas a checking account can take weeks to open.

Firms want this as a result of they usually maintain lots of of a unique financial institution accounts to separate funds generated by their subsidiaries or shoppers, stated Liba Saiovici, head of world receivables in international transaction companies for Financial institution of America.

“It turns into very pricey and sophisticated for the consumer,” Saiovici stated, as a result of they should make use of individuals to handle the accounts. “(Our) shoppers are increasing, however their treasury groups aren’t increasing on the identical fee.”

Transaction banking is a aggressive however fragmented enterprise. Citigroup Inc (C.N), the biggest international financial institution within the sector, instructions roughly 10% of the market, Chief Govt Jane Fraser stated earlier this month.

Effectivity, scale and important funding are key to gaining market share on this enterprise, Morgan Stanley analyst Betsy Graseck stated.

“It is a service that should constantly be invested in. Clearly there’s room for competitors.”

Reporting by Elizabeth Dilts Marshall; Enhancing by Richard Chang

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