Corporate Banking Series, Part 3: Digital Solutions with Significant Impact in Corporate Banking

Seamless online banking and enhanced digital advice are expected to deliver up to 60% increase in operating profit over 5 years. Part of the reason for this is that many corporate- banking customers have shifted to digital banking for their personal-banking needs. Of the 85% of respondents who conduct their personal banking online, 95% said that they expect the same capability for their corporate-banking needs, and nearly 90% indicated that they’re interested in engaging with RMs remotely. 

More than two-thirds of those surveyed want to access needed information with fewer than three clicks – especially to complete routine tasks, such as reviewing bank statements and submitting documentation with straight-through-processing.

There are three areas which corporate banks must undertake to compete effectively in today’s digital-first business environment: 

  1. Reinvent the customer journey.  This includes streamlining and automating digital onboarding, not just transactional journeys.
  2. Leverage on customer data 
  3. Adopt a Collaborative Operating Model 

Reinvent the Customer Journey

Few would argue against the importance of delivering unique customer experience (UX) over digital channels such as internet browsers and mobile applications to the bank’s clients.  However, corporate banking is far more complex in terms of content and services such as having an enterprise-wide view of the company’s liquidity position across multiple geographies and counterparty data.  Complex organization structures and approver hierarchy also add to the complexity of supporting business and corporate customers.  But even with these inherent complexities of managing the business, technology and provide a more streamlined and efficient way of conducting business.  This starts with understanding the roles in a corporate and the user journeys needed for each of those roles, such as the finance clerk who enters invoices, or the CFO who approves payments using his mobile phone.  Providing these capabilities requires a holistic view of how the business is managed and the pain points experienced in traditional methods used by many businesses today.

While retail digital onboarding has been on the rise, Banks are now looking to offer the same digital experience to their corporate banking customers due to the increasing demand for conducting the business digitally. Emirates NDB states1 that it has witnessed a 60% month-on-month increase in corporate digital onboarding volumes as new and existing transaction banking clients opt for digital channels for their ongoing cash management and trade finance requirements.

The current pandemic has pushed migration of banking services to digital channels, with up to 50% of banks seeking to either outsource or partner with third-parties to incorporate best practices in digital banking. 

Some areas that banks need to respond to the market dynamics include providing a seamless and fully digital onboarding experience, reduce the customer efforts such as paperwork and manual entry of data in the application thereby reducing the frustration and abandonment, eKYC, and AML compliance and so on.  

Leverage on Customer Data

One of the most competitive differentiators over Fintech firms and other innovative digital finance startups is that corporate banks have gathered a huge amount of data on their corporate clients.  This data can be leveraged in a variety of ways and more importantly, positioning corporate banks to be partners to their clients by offering highly tailored solutions that meet their commercial needs.  Examples of such solutions are as follow: 

  1. Supplier Management: Payment data over time offer trends that differentiate good and poor paymasters amongst suppliers.  Banks can leverage the data to recommend suppliers that the corporate entity should deepen relationships with due to their payment record. 
  2. Risk Management: Liquidity trends that are derived from data captured over an extended period allows corporate banks to identify periods where the corporate entity may require short-term funding as a result of slow-paying suppliers.  Conversely, the corporate banks can offer cash concentration or pooling options that’ll allow their clients to unlock the value of their excess cash. 
  3. The right products at the right time.  Leveraging the data, banks can better respond to the types of products needed to support their business customers and deliver those in a much timelier manner.  This will result in additional revenue opportunities by providing the “right products and services” at the right time to business customers.

Adopt a Collaborative Operating Model

Relationships between corporate banks and their clients are traditionally managed by relationship managers (RMs).  This model is unlikely to be eliminated with the deployment of digital corporate banking solutions which allows clients direct access to the bank’s platform, thereby bypassing the RMs.  Rather, digital corporate banking solutions allow RMs to spend more time with their clients with greater automation and reduced back-office administration requirements.  Another approach to creating a collaborative operating model is to have a platform that allows seamless interfacing with Fintech firms to deliver a combined value proposition for the bank’s corporate customers.

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