Customer Relationships: Virtual Banking and Cash Management in Italy

The purpose of this chapter is to analyse the development of cash management services within the broad field of the bank/customer relationship, using data from an international survey called “GlobalCash Europe ‘96” carried out with leading firms in 18 European countries. This kind of analysis is important because it may give empirical support to theoretical studies on the bank/customer relationship.With this aim, we study the case of Italy, which is characterised by three main interrelated features, all confirmed by the empirical survey. First of all, cash management in Italy has developed to a lesser degree than in other countries, especially those of Northern Europe: we expect that the improvement of cash management services in the near future will be more rapid and will be a significant means of strengthening relationships with customers, in the face of increasing competition from foreign banks. Furthermore, the structure of Italian industry is based on a large number of medium/small firms, which do not usually have well developed financial and treasury management functions, or technology. However in this increasingly competitive environment, they need to improve standards in these fields: the most important way of introducing and developing cash management is by changing the culture both at the banking level and at the businesses level, in order to develop a new area of demand.Finally, the Italian situation is characterised by a high degree of fragmentation of relations of firms with banks. This is obviously an obstacle in establishing a close link with one main bank, and also in the development of services of this type. The fragmentation can also increase the cost of liquidity and make difficult asset and liability management for firms.The analysis is divided into three main sections: the first describes the most relevant features of the bank/customer relationship in Italy; the second analyses the role of Information & Communications Technology and cash management within banks’ strategies of developing services in order to improve customer relationships. In the third part, data derived from the “GlobalCash Europe 96” survey are used to provide empirical evidence of the development of cash management in Italy. This analysis will help in outlining the possible future development of cash management as a means of strengthening the bank/customer relationship.