At Datos Insights’ recent Corporate Banking Executive Council meeting at the end of March, banking leaders emphasized the critical nature of treasury management innovation despite economic uncertainties. While most banks acknowledge their current treasury management offerings meet most customer needs, they recognize substantial further investment is required to remain competitive in a rapidly evolving market where embedded banking capabilities and real-time payments are becoming table stakes rather than differentiators.
IT Spend Must Continue to Increase Despite Market Uncertainty
Despite the uncertainty of the current moment, many financial institutions are spending more on technology, according to recent surveys of Datos Insights clients. Uncertainty about regulation and potential economic outcomes is top of mind for financial institution executives, and it is causing budget concerns. Yet, across Datos Insight surveys, we are seeing clients look to greater technology spend, advance technology projects, and rely heavily on AI for all parts of the business.
For example, over 60% of the participants of Datos Insights’ Corporate Banking Executive Council told us they are seeing higher Treasury IT budgets for 2025 compared to last year. In fact, 33% indicate significantly higher IT budgets (more than 7 percentage points growth).
While the particulars vary by business line, the current climate at this point is not sapping urgency and importance around technological investments. In the case of Treasury, these investments are necessary to keep pace with needs to enable real-time payments, embedded banking, and meet customer expectations.
Differentiation Is Key to Future Treasury Management Success and Requires Increased Focus on Innovation
The market share gap between the Big 4 banks and regional banks continues to widen in the treasury management space, and the threat of client attrition continues to grow. A recent Datos Insights survey of corporate treasurers found that about 25% of corporate treasurers are likely to switch financial institutions in the next two years.
Many Datos clients are looking to invest in new capabilities to counter these challenges. About 70% of bank treasury management executives on the Datos Insights’ Corporate Banking Executive Council admit further investment by their bank is needed to keep up with and meet the needs of today’s more demanding corporate customers.
Given this challenge, as banks increase their Treasury Management IT spend, more of that spend needs to focus on innovation. Fortunately, banks realize that, as more than half of the top 100 banks will spend at least 40% of their 2025 IT budget on innovation and differentiation (rather than regulatory compliance and running the business). This is a dramatic increase from the past when 10% was more typical.
The Silos Between Lending and Treasury Must Come Down
While lending is critical to treasury management leads, most treasury management executives see a large gap in making this happen. In fact, 96% of banks describe lending as important or very important for generating treasury management leads for their bank. However, 54% of treasury management executives on Datos Insights’ Corporate Banking Executive Council describe the partnership between loan offers and treasury sales officers as not effective or not where it needs to be.
The silos that exist between the two groups is leading to missed opportunities to deepen relationships and “anchor” clients with treasury products that often outlive the life of a loan, while also leaving treasury’s fee-based revenue on the table. In most cases, treasury is brought in after the credit relationship is established rather than upselling treasury products earlier on when the client is most likely to adopt them. In contrast best-in-class banks incorporate cooperation across the two teams into performance goals, have senior-level buy-in, and offer financial incentives encouraging cross-sell.
As banks navigate economic uncertainty and evolving client expectations, the data is clear: treasury management investment must remain a strategic priority. Our next in-person Datos Insights Corporate Banking Executive Council meeting is on October 14. For more information on the Corporate Banking Executive Council and how to join, please visit our website.
