In Treasury Management, to the Victor go the Spoils

Not to be alarmist, but: The rise of tech competition for commercial clients could spell the slow death of legacy banks.

Legacy financial institutions face an urgent and worsening retention issue with commercial clients. Running a business is complicated, and executives are increasingly interested in tech that makes it easier to handle financial tasks, move money faster, and gain more visibility into spending. The question is whether they can get these services and features from the same institution that holds their deposits or offers them loans, or whether they will need to move their business elsewhere.

What’s Possible, and What’s Expected

Banks that have long relied on their core provider for treasury management services may have missed the significant technological changes in this space.

Over the last decade, tech companies have raised the bar on what financial products look and feel like: real-time visibility, intuitive controls, instant issuance, clean reconciliation. These features and capabilities allow for automated workflows and tasks, reducing manual calculations and reconciliations and minimizing the potential for fat-finger errors.

Adding urgency to the offerings gap is the changing expectations of customers themselves. The expectations of today’s modern chief financial officer are changing because, well, the CFO is changing. Expected retirements and promotions and demographic trends in business formation mean a younger generation is assuming key finance and leadership roles at commercial firms, said Rouzbeh Rotabi, Chief Operating Officer at Qolo, during a recent webinar.

The next generation of finance leadership is accustomed to and, often, comfortable with modern technology and software. They don’t want to have to use spreadsheets to manage their firm’s disparate finances, funds and accounts. They don’t want to do their account aggregation and reconciliation manually. They increasingly expect finance and tech firms to offer solutions that help them solve their money-adjacent problems: funds availability, permissioned payments, visibility into subledgers.

That puts traditional commercial banks in a tough place: They need to provide comparable experiences to these digital-first competitors, but they’re legacy shops built around decades-old cores. Fortunately, the technology available to these institutions has also changed.

In the past, only the largest banks had the resources to partner with tech firms to build these capabilities. Not anymore. Banks of all sizes can partner with firms that provide the infrastructure layer that allows them to upgrade the experience of existing commercial clients, retaining their best and most profitable clients, with the potential to grow their commercial offerings and expand noninterest income.

The Four Horsemen of the Treasury Management Apocalypse

Outside of the technology possibilities and the user expectations, there are four market trends creating a gap between the legacy treasury management technology available at most commercial banks today and what’s motivating commercial clients.

1. Treasury functions are increasingly central to commercial corporate strategy. The finance office oversees an important and complex function within companies. CFOs need a real-time financial command center — something beyond the standard offering from commercial banks of a portal, relationship manager and an overnight report.
2. Banking is embedded. Commercial clients are opting for workflows with embedded finance features: the ability to make payments, view balances and reconcile automatically without logging into their bank accounts. Three-quarters of corporate clients say that seamless integration of banking services or treasury tools within their enterprise resource planning, or ERP, system is a top priority, according to a 2025 report from Deloitte. Most aren’t waiting around for institutions to add this functionality: two-thirds say they would switch banks for better connectivity with their systems.
3. Money is moving faster than banks’ legacy infrastructure. Financial institutions now have access to two instant payment networks that have transaction limits and features that are perfect for commercial use. However, most FedNow financial institutions are still receive-first, even as the service nears its third anniversary, according to the Federal Reserve Financial Services. Offering clients the ability to send instant funds allows institutions to capture the biggest upside of instant push payments. Institutions already in the network have a clear imperative to update their payment infrastructure so they can participate in‚ and benefit from, instant fund transfer more fully.
4. Stablecoin payments are becoming mainstream. Stablecoins are programmable money that can carry rules, route automatically and settle without a correspondent. Under the recently passed GENIUS Act, nonbank entities can compete directly with banks under the right conditions. Banks are welcome to offer stablecoins to their customers as well — if they have infrastructure that can manage programmable value, offer real-time visibility, fund-level controls and auditability. Batch core processing requires an orchestration layer to do any of that.

These trends are creating a gap between banks’ technological capabilities and customer expectations. This gap will only widen at institutions that continue to rely on their legacy technology processors for their commercial client capabilities. It’s only a matter of time before commercial customers notice and start to look for better alternatives.

What’s Next

I don’t think any bank has on its strategic plan: “Slowly lose our best commercial customers to tech-forward competitors or banks that can serve them better.” And yet, without further action, that’s what could happen. When these customers leave, they won’t just take their loans and interest income; they will take their low-cost deposits and recurring fee revenue with them. A bank losing the best and most profitable customers is a first step toward outcomes like slow profitability declines or an eventual acquisition.

The antidote to that outcome is action. But what actions? Start with these.

1. Have the strategic conversation at your institution. Has the board of directors identified treasury management as a strategic focus? Have executives decided the bank will make the necessary investments needed to retain your existing commercial customers and the next generation? Do you want to grow this customer base? If the answer to these questions is “yes,” start by creating the go-to-market and product strategy that justifies or explains why you deserve to win.
2. Conduct a competitive analysis. Your institution needs to understand what companies are attempting to lure your customers away. Names that need to be on this list include:
   1. Nonbank tech competitors like Ramp, which is thought to have a run-rate revenue of $1.5 billion, according to Bloomberg News, and recently raised $750 million at a $44 billion valuation.
   2. Tech-first competitors seeking or have bank charters such as Mercury Technologies and PayPal Holdings. Stripe obtained a merchant acquirer limited-purpose bank charter from Georgia last year, which allows it to be a principal member of Visa and Mastercard and process payments directly. Block is an older competitor, having obtained its ILC in 2020; the company announced in January that its subsidiary Square Financial Services has originated more than $20 billion in loans.
   3. Commercial banks that have signaled that treasury management is a strategic priority. This includes, among others, Capital One Financial Corp, which announced it agreed to acquire Brex earlier this year, and Huntington Bancshares and KeyCorp, which both have partnerships with Qolo, the sponsor of today’s deep dive.
3. Create a technology analysis. Using the list of competitors, identify the capabilities and features these firms offer commercial customers and compare that to your firm’s current offerings.
4. Get alignment with internal teams. Get alignment with compliance, risk and operations before beginning a search, and keep them involved the entire time. It’s better to listen to their concerns and get their insights early in the process, even if it extends the search and due diligence efforts. If they don’t get them addressed and incorporated early in the process, banks risk these teams finding issues during the implementation process.

“That’s the recommendation we make every time we go into a bank for the first time: Involve your compliance teams, your risk teams, your ops teams and your go-to-market teams. Involve them early,” Darren Beyer, chief product officer at Qolo, told me during an episode of the Bank Nerd Corner podcast.

5. Time to search. With your shopping list of capabilities to add and stakeholders who are ready to give insight and assistance: it’s now time to shop. Technology has changed a lot in recent years, and much more is possible, available and affordable for banks of all sizes. Get your RFI process fired up, and leverage existing resources to help evaluate new technology and capabilities. For instance, Qolo has created an explainer and outline for how banks can evaluate a virtual account management platform, a feature that may have come up in the technological gap analysis an institution should’ve completed earlier.
6. Execute and iterate. There is no magic wand in banking: not for loans, not for deposits and not for treasury management. Your competitors are continually investing in products and services that will woo your customers and their business away from your institution. The tech underpinning your treasury management is a tool; your institution needs to make sure its wielders are experts. After any implementation and upgrades, banks will need to staff, train and support employees so they can better serve customers.

Finance officers want technology that makes it easier for them to run their business. They don’t want manual reconciliation, and they don’t want to manage spreadsheets. They might not be actively looking for a new banking relationship, but they likely won’t stay satisfied for a commercial banking or treasury management experience that lags what they’re used to as a consumer, or what they see peers using from tech competitors.

You don’t have to lose that customer, but you will need to change the technology that will force them to leave. Banks that can combine a full and deep banking relationship with a product experience that offers real-time visibility, modern card controls and clean reconciliation are poised to win with the next generation of finance officers. Hopefully that’s you.