© 2011 Treasury Strategies, Inc. All rights reserved.

Treasury Services: Innovating For The Next Generation

May 23, 2011

Presented by: Tony Carfang, Partner Cathy Gregg, Partner

Dave Wexler, Principal

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Meeting Objectives

1. Discuss innovation, its importance in our industry

2. Understand the emerging client needs

3. Identify areas of potential opportunity /challenge

4. Prioritize these areas and agree on a way forward

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Perspectives

Treasury Strategies’ corporate, financial services, and technology practice area perspectives reveal marketplace inconsistencies significant to this discussion.

•  Although our bank clients work hard and invest heavily to differentiate themselves, our corporate clients see similar-size banks as largely undifferentiated.

•  Much recent transformative banking innovation originated outside the industry.

•  The largest banks are focused on leveraging their processing scale but not truly leveraging their information scale or their network scale.

•  Corporate spend on managing the working capital cycle can be 10x to 25x the spend on bank treasury management services.

•  Virtually all corporate treasury operations are subscale.

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Treasury 3.0 - Corporate Perspective

Data Information Intelligence

Treasury Management Timeline

Treasury Operations is an

immature, fragmented or

informal function, characterized by manual processes

Treasury centralizes key roles, improving

transparency and controls

Greater access to data and computing power and consolidation of

competency

Treasury 1.0

LOW

HIGH

Treasury is a strategic advisor, more closely

integrated with business units, supporting

globalization, efficiency, trading partner/supply chain integration and

greater sophistication in risk/return optimization

Data Information Intelligence

Treasury 2.0 Treasury 3.0

Pre 1970 1970 - 2010 Now - Future

Trea

sury

Influ

ence

& V

alue

Add

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3.0 Treasury

Financial Nerve Center view fulfills unrealized potential of ERP

Regulators

Treasury=

Nerve Center

CapitalMarkets

FundManagers

BanksRating

Agencies

BusinessSegments

Board ofDirectors & C-Suite

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Corporate Trends

• Credit crisis revealed counterparty risk management gaps • Firms coming to grips with country and political risk • Fraud accelerating and diversifying

Risk

• Firms re-engineering treasury technology & banking structures for liquidity visibility / access

• Companies consolidating & optimizing global liquidity

• Cash & FX exposure forecasting continues to improve

Liquidity

• Payment ops consolidation improves efficiency & speed of financial value chain

• Data & analytics improving cash application speed and accuracy

• Increased adoption of financial supply chain solutions

Payments

Globalization

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Treasury 3.0 - Bank Perspective

Data Information Intelligence

Treasury Management Timeline

Treasury 1.0

$175B

$1T +

Client Accommodations

Cash Management

Treasury Management

TBD

Treasury 2.0 Treasury 3.0

Pre 1970 1970 - 2010 Now - Future

Rev

enue

Rapid scope and volume growth, but

$0 revenues as industry fails to commercialize

Approaching zero-sum game dominated by

several global and regional players

Comprehensive payment & liquidity solutions

Supply chain solutions Increased segmentation and refined competitive

identities Web solutions innovations

$0

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Banking Scale

Today, transaction banking is a fragmented $175B+ industry; top 3 players each have roughly 5% market share.

In the next decade, top players will triple in size and control larger shares of a $250B+ global industry

Source: TSI data and proprietary econometric modeling

Consolidation and Growth

0

5

10

15

20

25

30

1980s 1990s 2000s 2010s

Decade

US

D B

0%

2%

4%

6%

8%

10%

12%

Mark

et S

hare

Top Player Share Top Player Revenue

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Barriers to Innovation

•  Financial barriers - inadequate funding •  Risk avoidance mentality

•  Distraction

•  Suffocation •  Wrong measures of success

•  Constrained thinking •  Time commitment too short for success

•  Unrealistic payback horizon

•  Too few bets

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Value Proposition Frame

Consider white space that exists within the value propositions you deliver to customers

Proposition Success Factors Commercial Payments Scale and footprint

Financial Settlements Scale / monopoly of sector

Financial Supply Chain Very broad scope of services and solutions (including non-traditional) delivered broadly into customer organization

Liquidity Robust investment product set; understanding of how to optimize deposit balances; deeper client penetration

Trading Partner Well-developed understanding of buyer/seller relationships and regulatory insights; solution approach; willingness to invest and customize

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Treasury 3.0

Treasury Operations Capital Markets Cash Reconciliation

Cash Positioning

Cash Forecasting

Payments

Debt

Investments

FX

Bank Acct Admin

Interest Rate Hedging

Trade Confirmation

Stra

tegy

W

orkf

low

s A

nalytics & B

usiness Logic

Order to Cash

Procure to Pay

Corporate Treasurer and banks work together to achieve this.

Risk Management

Metrics & Decision Support

Intelligence

Record to Report

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Questions

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About Treasury Strategies, Inc.

Who We Are Treasury Strategies, Inc. is the leading treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions.

@TreasuryStrat

www.TreasuryStrategies.com/ networking/netCommunity.htm

What We Do Corporations We help you maximise worldwide treasury performance and navigate regulatory and payment system changes through a focus on best practices, technology, liquidity and controls. Treasury Technology We provide guidance through every step of the technology process. Our expert approach will uncover opportunities to optimise the value of your treasury through fully integrated technology solutions. Financial Services Our experience, analytic approach and benchmarks provide unique consulting solutions to help you strengthen and grow your business.