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Are Banks Effectively Meeting the Cash Management Needs of Middle Market Businesses?

Are Banks Effectively Meeting the Cash Management Needs of Middle Market Businesses?

Despite the fact that most U.S. banks have increased their investment in cash management initiatives, 78% of middle market companies continue to bank with large financial institutions.

Boston, MA, May 14, 2007 – A new report from Aite Group, LLC explores the cash management needs of middle market companies and examines which banks have been the most successful at serving them.

The report, based on a survey of 200 U.S. middle market companies (defined as those businesses generating between US$50 million and US$500 million in annual revenues), identifies customer service and online cash management capabilities as the key factors middle market companies consider when selecting a bank. Many of these businesses require their banks to offer cash concentration, positive pay and foreign exchange- online capabilities that most U.S. banks do not yet offer. Because of this, the biggest banks have been most successful in capturing this attractive market segment, which tends to use multiple bank products and is generally more loyal than larger businesses. This could change going forward as all banks, regardless of size are dedicating more resources than ever before to business banking initiatives.

"Despite their attractiveness, it has been primarily the largest banks that are enjoying the benefits of serving the middle market business segment," says Christine Barry, research director at Aite Group and author of this report. "While the cash management offerings of many banks do not scale or offer the necessary level of functionality depth to meet the needs of the largest corporations, enhancing their solutions to serve the middle market is within their means. Thanks to advances in technology, the necessary enhancements are readily accessible."

This 18-page Impact Note contains 11 figures and tables. Clients of Aite Group's Wholesale Banking services can download the report.