Banks are finding it ever-better to be in the cash management business. There is more concentration, more customers, and less competition:
Companies participating in Greenwich Associatesâ€™ 2006 U.S. Cash Management Research Study are steadily increasing the share of their total cash management business awarded to lead banks. On average, U.S. companies allocated nearly 60% of the cash management business to their lead provider in 2006, up from just 56% in 2005.
….Only 1% of U.S. companies now say they put their cash management business out to bid every year, and the proportion putting it out to bid every 13 months to two years dropped from 9% in 2005 to 6% in 2006. Meanwhile, 40% of companies say they put the business out to bid every three to five years and more than a quarter do so only once every five or more years. â€œThe share of U.S. companies reporting that they never put their cash management business out to bid increased from 21% in 2005 to 28% in 2006,â€ notes Greenwich Associates consultant Don Raftery.