Transaction banks cross the globe had to navigate numerous shifts in the cash management (CM) space over the course of 2024.
The changing and diverging interest rate environment has certainly kept them on their toes. They had been acclimatising to rising interest rates since 2021/22, while still recovering from the effects of the Covid-19 pandemic, when many central banks performed a volte-face and started cutting rates – but in a much less coordinated way.
Banks had to react swiftly to clients’ changing CM demands, for example multinational corporates’ desire to move funds around to achieve the best return. Being quick off the mark with innovative cash pooling and cash concentration solutions has been a critical differentiator for banks in 2024.
ISO 20022 and The Untapped Potential for Corporates
In addition to macroeconomic developments, the ISO 20022 migration has been inching up banks’ agenda ahead of the November 2025 deadline.
While the move from SWIFT MT to ISO 20022 (MX) messaging standard, which carries much more information with the payment, has garnered a lot of attention in the past year, progress has been slower than many hoped. Corporates are struggling to align their ERP systems with their banks’ CM systems. As such, many are still not ready and are using translation tools as a workaround solution.
Importantly, MX migration opens up new opportunities for corporates, such as the ability to pull transaction data to create their own statements. APIs and data streaming are also part of the ISO transition.
The Role of APIs in Modern Banking
While we have seen much consistency in the corporate-to-bank relationship in the past year – in our recent Tietoevry Cash Management Survey Report 2024 more than half of the corporate respondents reported stable banking relationships – greater change is expected as banks begin to add value through new functionality, reducing operational costs, and improving efficiency.
The growing collaboration between banks, fintechs, and software vendors, enabled by APIs, is playing a significant role in this evolution. Each player brings something unique:
- Banks offer trust, scale, and regulatory expertise
- FinTech's contribute agility and innovation
- Software vendors provide robust technology, enterprise scale, and operational capabilities.
Innovations in Cash Management Solutions
By leveraging these strengths, banks can deliver more seamless, cost-effective, and innovative solutions for corporate clients.
This collaboration is helping banks modernise their self-service offerings, enhance customer experiences, and streamline operations, ultimately allowing them to build deeper, more dynamic relationships with their corporate customers in a rapidly changing financial landscape.
This demand goes beyond basic functionality. In the virtual account space, for instance, corporates now expect full self-service capabilities, enabling them to operate multi-entity platforms entirely on their own. Moreover, there is a growing emphasis on the use of APIs to integrate directly with banking services. This allows corporates to pull real-time data and information into their internal systems, such as ERPs, streamlining operations and ensuring seamless access to critical banking functions.
By meeting these expectations, banks can significantly enhance customer satisfaction while reducing operational overhead, creating a more efficient and responsive banking experience for their corporate clients.
Future Trends: What to Expect in 2025
In the context of the continuing debate around capex versus opex spend, banks worldwide want to leverage the advantage of software-as-a-service, public cloud-based solutions to keep their infrastructure costs under control and predictable. This trend will strengthen throughout 2025.
Also this year, we expect to see significant innovation in several key areas:
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Global accounts: The development of virtual accounts operationally linked to local clearing systems will enable customers to process local payments seamlessly, while maintaining a central account in their home jurisdiction. This innovation will streamline cross-border transactions and simplify cash management for corporates with global operations. |
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API-driven connectivity: Banks will continue to enhance API-driven connectivity, providing corporates with real-time access to critical information. This capability will enable businesses to integrate banking data directly into their systems, improving efficiency and decision-making. |
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AI-powered solutions: The investment in AI-powered tools will drive advancements in cash flow forecasting and decision-making. AI will enable businesses to apply intelligent rules and analytics, offering deeper insights, and more accurate predictions to optimise liquidity management. |
These innovations will shape the financial landscape, making processes more efficient, transparent, and responsive to the evolving needs of corporates.
Embracing Change for a Competitive Edge
Of course, we are also looking at the potential of generative AI (GenAI) to transform what we do. While many use cases are still being explored, I am convinced that GenAI will drive operational efficiency in CM. My vision is what we’ve called ‘contextual CM’, where a treasurer can ask a chatbot like Alexa or Siri to confirm an account’s cash position. Instead of going into the user interface, they receive an instant voice response. It’s not a reality yet, but we’re working on it.
Returning to macroeconomic trends, I expect interest rates to remain variable and divergent between geographies in 2025. We are entering a second Trump era and it’s uncertain how the Federal Reserve will act under the incoming administration. The Fed’s decision will also impact other monetary agencies, especially in emerging markets.
Banks will need to have comprehensive cash concentration and notion pooling offerings, so that corporates can maximise their cash positions and hold cash in jurisdictions where they can get the best return.
Learn more and gain insights:
Tietoevry Global Cash Management Survey Report