Corporate Banking “Digitalization Strategy”: Are we approaching it in the right way?
(Updated July 1, 2019) Article published on LinkedIn on June 3, 2017
When we read or hear about “Digital Strategy” it is mostly about:
Secure and streamline digital venues: web, mobile & tablets
Ease of Use
New Technology and how it will help
Well, this is not the end game!!! “Digital Strategy” for corporate banking is about: Keeping my corporate clients satisfied with my services and generating more business with them.
This is the END GAME
The above-mentioned points must be used for the purpose to achieve the End Game.
For years, corporate banking has been surfing on a steady revenue thanks to good relationship management with corporate treasurers. Capital Markets and bank’s Treasury went through a heavy restructuring and large technological investments to reduce the cost and meet regulatory needs, whereas Corporate Banking services, technology, and processes did not evolve much.
This is not going to last. With the upcoming new regulations hitting soon like PS2D, Open Banking API … corporate banking is at a crossing point:
Modern Corporate Treasurers look at banks to provide a consolidated view of their financial operations through an aggregated, consistent, and holistic representation of data known about their customers, suppliers, cash flows and risk. They expect more services like profiling, investment strategy proposals, hedge recommendations, funding optimizations proposals...
Banks need to be prepared to act as a "one-stop-shop" solution provider for their corporate or risk losing the business to more aggressive third-party institutions.
In a discussion with a Head of Finance of a major European corporation, the following was mentioned:” Banks do not fully understand what we do, they have solutions to our needs but they are all scattered in different departments of the bank, this requires us to connect with different people that do not talk to each other”
This is an important revelation: Banks do not understand..., they have solutions..., but not centralized.
Today's corporate treasurer is not just looking at its bank to sell him/her standard products (through digital channels or not), he/she is demanding (Modern Corporate Treasury Topography):
Understand the business
Tailor-made solutions (at least for the corresponding industry)
Faster time to market solutions
Easy to use solutions
Centralize the relationship “one-stop-shop”
What does it mean practically for banks? How a bank should tackle its “Digital Strategy” in a pragmatic way to satisfy a modern corporate treasurer and increase its business with the corresponding corporate?
The Corporate Banking future reminds me of the Electricity business in the UK after the deregulation: Now few large companies produce and transport electricity, the companies that did not adapt to the new “era” disappeared and 100s of small third-parties jumped in replacing them and offering services around electricity.
Already several third-party players are entering the “banking” market and chipping business from banks: payments and financial-supply-chain solutions Taulia, Square, PayPal, Stripe; financing Kickstarter, OnDeck Capital; settlements Ripple; account information service provider (AISP) Mint; investment Robinhood...
Others understood the game and built a solution to help the banks: Finastra
Some banks like BBVA are playing an intelligent card and opening to fintech companies through building an app market (AI Taking Advantage of PSD2).
It is very simple, relationship in this digital age is not as important as before, services are. If a bank cannot provide the level of service the modern Corporate Treasurer expects, the Corporate Treasurer will find its happiness elsewhere and there are hundreds of startups or large companies that will be able to replace the banks' most profitable services very soon.
Most of what a Corporate Treasury needs is available within the 3 businesses of a typical bank (Capital Market, Treasury and Portfolio Management).
At Fintekminds we understand very clearly what Modern Corporate Treasury needs are, and designed a step by step practical approach that helps banks better prepare their “Digital Strategy”. We identified how to satisfy these needs by repurposing and leveraging technologies already used in Capital Market, Treasury and Asset Management in a non-invasive and pragmatic way.
Below is a high level of what a typical modern Corporate Treasury functions needs are.