Few dispute that Chinese tech giants have shaken up retailbanking, changing how millions of customers do everything frompaying their bills to choosing insurance. But the real disruptionmay be occurring in a more staid corner of finance—and it's beingled by Wall Street.

As investment-banking revenues slumped in the wake of the globalfinancial crisis, traditional broker-dealers found that trading anddeal-making weren't cutting it. Steadier money could be made incash management, the humdrum business of assisting multinationalcompanies with daily liquidity and getting the most out of idledeposits by deploying them in global markets.

JPMorgan Chase & Co.'s treasury services business, its lingofor cash management, hit a 20 percent return on equity last year,compared with 15 percent for its corporate and investment bank.Citigroup Inc., a global leader in this area, posted a return onequity from transaction banking (which is dominated by cashmanagement) in the mid-20 percent range, according to a 2017investor presentation.

These sort of results underpin Goldman Sachs Group Inc.'s recentdecision to use technology to make a splash in cash-management—inJapan, among other countries—as part of a global push later thisyear. The country's appeal is two-fold. Corporate treasurieseverywhere seek yen assets when they want to hide from globalturmoil. Meanwhile, Japan could also support Goldman's fledglingambitions in online retail banking, which requires reliable accessto liquidity. Taking a digital platform to cash-rich, yield-hungryJapanese companies—and snagging even a sliver of theirdeposits—would mean cheaper funding than the wholesale market.

It should also help Goldman that Japan's megabanks don't evencrack the top 15 among Asia-Pacific cash-management leaders,according to Gaurav Arora, head of Asia Pacific at GreenwichAssociates. While Mitsubishi UFJ Financial Group Inc., MizuhoFinancial Group Inc., and Sumitomo Mitsui Financial Group Inc. areupgrading their technology and expanding their digital reach, theyremain well behind global players. Out of Mizuho's surprise 680billion yen ($6.2 billion) writedown in March, about 460 billionyen was related to a long-delayed move to integrate its computersystems. For their part, the megabanks must be worried aboutGoldman's arrival. The likes of Citigroup Inc. and HSBC HoldingsPlc were already beginning to challenge Japanese banks'longstanding domestic client relationships by winning over theiroverseas units.

While the initial costs involved in building out a platform arehigh—think of all the banking licenses and regulatory approvalsrequired in a vast region like Asia—cash management is sticky. Oncea finance department adopts and integrates a bank's system, itdoesn't flip for a competitor easily. This is also a low-marginbusiness, albeit with high operating leverage; it doesn't requirecapital set aside to manage the risk of credit losses. And unlikeinvestment banking, growth doesn't depend on million-dollarbankers.

Japan could become a testing ground to move this business fullyonline. Goldman inevitably will need brick-and-mortar partners tomanage the physical cash collected by domestic distributors formultinational clients such as Procter & Gamble Co. In thatvein, the bank's entry could be a model for other Wall Street firmsthat lack a physical footprint. But global banks already big incash management have a major advantage: They can simply protecttheir turf by beefing up digital offerings.

The idea that banks' software should seamlessly connect withclients' online applications is gathering interest. Three-quartersof large companies in Asia Pacific said they sought so-called openbanking arrangements, with treasury management among their topthree priorities, according to an Accenture Plc survey last year.Half of the bankers in the region expect 5 percent to 10 percent oftheir divisions' revenue growth in the next three to five years tocome from open banking for commercial customers. Another 43 percentgave even more optimistic forecasts to the the consulting firm.

Managing corporate cash online isn't as sexy as a consumer superapp. But it's not yet clear that retail customers can transitionfrom keeping small sums on deposit for movie tickets and pizzadelivery to forking over substantial shares of their income andwealth to web-only banks, as we wrote previously. Without steadyretail deposits, the fintech dream of lending to small businesseswill remain just that.

Eking out a digital win for a bank like Goldman, which can leanon its investment-banking relationships to sign up cash-richmultinationals, is perhaps a more modest leap of faith—and thelanding may be more sure-footed.

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