5 Trends in Corporate Banking in 2023

Corporate banking is undergoing significant changes as the business world continues to evolve. The banking industry is not immune to these changes, and as a result, corporate banks are changing the way they operate to keep up with the times.  The following five trends are currently shaping the future of corporate banking :

1. Life Cycle Banking and ERP Integration is Critical

A business’s life cycle is not static, and its banking requirements change as it grows and evolves. Banks must keep up with these changes and offer relevant products and services at every stage of the business’s life cycle. Companies increasingly require the capabilities of enterprise suites that break down traditional departmental silos. Integrating Enterprise Resource Planning (ERP) systems with banking platforms is crucial for providing a holistic view of a company’s financial position. This integration provides real-time data on cash flows, inventory levels, and customer orders, allowing banks to offer customized solutions to businesses.

2. Digital On-Boarding for Corporates

The onboarding process for corporate banking customers has traditionally been a tedious and time-consuming affair. The rise of digital technology has made it possible to streamline the process and make it more efficient. Digital onboarding allows for faster and more accurate data capture, reducing the time required for due diligence checks. This technology also provides a better customer experience, making it easier for businesses to open and operate their bank accounts. Digital onboarding can accelerate customer acquisition in corporate banking, save costs, and increase customer satisfaction among business clients. To achieve this, banks need to reorient their corporate customer strategy to align with changing customer needs in the digital age. In today’s challenging environment, digital onboarding can position itself as a competitive advantage.

3. Interest in Virtual Account Management Grows

Virtual Account Management (VAM) can revolutionize treasury management by providing greater visibility and control of a company’s cash flows through the creation of multiple virtual accounts linked to a single physical account. This simplifies reconciliation and optimizes cash flows, benefiting both large corporates and organizations dealing with payments and collections in various currencies. VAM also offers real-time clarity of working capital and greater operational efficiency, making it a more cost-effective solution than traditional cash pooling techniques. To fully realize its potential, banks must adopt a client-focused, self-service approach and identify precise customer segment challenges. The possibilities for VAM applications are endless.

4. Accounts Payable Solutions

Accounts payable solutions are essential for banks providing corporate banking services as they ensure accurate and efficient processing of financial transactions, minimizing errors and reducing processing times. Automating this process improves operational efficiency and customer service, while also generating valuable insights into payment behavior for upselling and cross-selling opportunities. With digital transformation accelerating, businesses are expected to replace time-consuming manual activities and paper documents with electronic accounts payable processes. However, going forward ensuring the correct processes are in place is crucial, as those who fail to do so may experience negative impacts until they get it right, while those who succeed will save money and increase sustainability.

5. Supply Chain Finance

Supply chain finance is vital for corporate banks to offer value-added services to clients. By providing SCF solutions, banks can help clients optimize working capital, improve cash flow, and lower operational costs. SCF also benefits banks by reducing funding costs and improving risk-adjusted returns through credit rating leverage and credit risk diversification. This is particularly useful for banks in emerging markets where SCF can mitigate risks from volatile economic conditions and weak credit infrastructure. Real-time data analytics enable better forecasting, managing supply and demand, decreasing operational volatility, identifying new market opportunities, and fighting off inflationary pressures and economic stagnation.

In conclusion, the corporate banking industry is evolving rapidly, driven by changing customer needs and new technologies. Banks that can adapt to these changes and offer relevant solutions to businesses will thrive in the years to come. The trends highlighted above are just some of the key drivers that will shape the future of corporate banking. By embracing these trends, banks can provide their customers with the solutions they need to succeed in today’s fast-paced business environment.
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