Bank of America aims to boost business cash management with new tool

A person walks past a Bank of America sign in the Manhattan borough of New York City, New York, U.S., January 19, 2022. REUTERS/Carlo Allegri/File Photo GLOBAL BUSINESS WEEK AHEAD

NEW YORK, June 14 (Reuters) – Bank of America (BAC.N) is rolling out a new cash management tool for its U.S.-based customers, it said on Tuesday, in a bid to gain market share. market in the cash management business of $300 billion. for multinational corporations.

Transaction banking — which covers processing employee payroll, paying vendors and collecting from customers — contributed about 8% of the bank’s total revenue in 2021, or $7.23 billion.

The second largest US bank has announced that it is expanding its virtual account management (VAM) tool – already available in Europe – to the United States, where the COVID-19 pandemic has accelerated the use of electronic payments by customers.

The tool helps businesses manage multiple accounts by creating a virtual ledger, accessible online, that displays all of their account balances and transactions, and can model future cash flows. The tool can be opened and used within a day, whereas a bank account can take weeks to open.

Companies need it because they often maintain hundreds of different bank accounts to segregate funds generated by their subsidiaries or customers, said Liba Saiovici, head of global claims in global transaction services for Bank of America.

“It becomes very expensive and complex for the client,” Saiovici said, as they have to employ people to manage the accounts. “(Our) clients are growing, but their treasury teams are not growing at the same rate.”

Transaction banking is a competitive but fragmented business. Citigroup Inc (CN), the world’s biggest bank in the sector, has about 10% of the market, chief executive Jane Fraser said earlier this month.

Efficiency, scale and significant investment are key to gaining market share in this sector, said Morgan Stanley analyst Betsy Graseck.

“It’s a service in which you have to constantly invest. There is clearly room for competition.”

Reporting by Elizabeth Dilts Marshall; Editing by Richard Chang

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