By Justin Silsbury, Lead Product Manager for Cash Management, Infosys Finacle

Early steps 

Traditionally, enterprises were so reliant on manual processes and physical interactions for banking that banks would even station relationship managers on their clients’ premises. It would take a pandemic to push tech-reluctant corporate banking to digitize at speed. Today, corporate banks as well as their customers are in a race to transform, and are ramping up strategic investments to modernize their systems. 

As the technology partner of several global corporate banks, Infosys Finacle wanted to understand the key trends in corporate banking, including customer needs, innovation focus, digital transformation maturity and emerging business models, in a post-pandemic setting. Earlier this year, we collaborated with Red Hat and Strategic Treasurer to ask more than 100 corporate bankers around the world for their view on the important developments in their business.  The report, Leaping Forward: Scaling Digital Adoption in Corporate Banking, spotlights technology adoption was a primary theme, with a very significant number of respondents acknowledging the need for digital transformation: when asked to rate the importance of various technologies in delivering desired business outcomes, 84 percent of respondents said open APIs were essential or very important. Other digital technologies also received high ratings – mobility (81 percent), advanced analytics (85 percent), cloud computing (83 percent), AI (83 percent) and RPA (66 percent). 

However, there remains a significant gap between acknowledgement and execution, which would then translate to successful business outcomes. For instance, despite their perceived importance, advanced analytics, open APIs and cloud computing, only 10 to 12 percent of the survey respondents have affirmed desired outcomes yet.  

While corporate banks clearly need to step up the pace of digital adoption within their organizations, the rising expectations of corporate customers will only mean that they need to deliver better business outcomes sooner.  

From our experience we can say that enterprises are looking for banking products and services built on real-time foundations, for example, real-time cash management, or real-time payments. Another critical requirement is real-time insights to help them make better decisions. Corporates also want ease and efficiency in banking operations by way of automation, integrated offerings and seamless connectivity with their banks 

All of the above confirms that the modern technologies will have a vital role to play, elevating the customer experience, and consequently the business outcomes!

There’s opportunity; there’s threat…

Enterprises are signalling opportunity by voicing these expectations, but they are also making moves that could create a few problems for their banks, especially the digital laggards among them. For instance, treasurers, who typically juggle a large number of banking relationships, are increasingly seeking to rationalize at least the primary ones among them. They will eventually succeed, because technology-led modernization is enabling them to consolidate their operations across fewer banks. 

Companies, which are becoming more digitally mature, are also now considering working with non-bank providers, such as fintech firms. These firms are leading innovation in areas, such as cross-border payments and other cash management products, leveraging automation, AI and other technologies to allow treasurers to perform these transactions entirely online. Apart from fintech companies, digital-only banks and other next-gen players are also making efforts to attract corporate clients.

…And there are also proven use cases

In the face of competitive pressure, incumbent corporate banks need to scale up effort, investment and adoption of digital technology to retain their clients. The good news is that they can quickly leverage a number of established use cases, some of which are listed below.

Analytics for cash flow management: Forecasting cash flows accurately is a top priority of treasurers, and also one of their biggest challenges. This became even more difficult when the pandemic severely disrupted cash flows and rendered traditional forecasting models irrelevant. Corporate treasurers are urgently seeking solutions with deep analytics capabilities that can process huge quantities of data (including external) in real-time to provide accurate projections even in a volatile environment.  Segment-driven insights is also a key ask. Since the business dynamics and cash flows vary from sector to sector – some companies have cyclical cash flows while others operate almost on a cash-and-carry basis – treasurers need solutions with an understanding of not only their specific operations, as well as gain insights into the cash management trends in their industry. 

AI/ML for digital advisory: A big responsibility of RMs was advising treasurers on how to manage their liquidity. For example, if the corporate account had funds that would not be needed for five days, the RM would suggest moving it into a money market instrument to earn some interest during that period. Typically, this discussion happened across the table. But with tech-savvy millennials entering the workforce, enterprises are demanding digital experiences and self-service capabilities, akin to those enjoyed by retail customers. Technologies, such as artificial intelligence and machine learning, are giving rise to digital advisory services, which automatically prompt treasurers as soon as they log in about opportunities to optimize their liquidity. Corporate banks should tap these tech driven solutions in order to retain their future customers. 

APIs for seamless connectivity: Enterprise clients waste significant time and effort in logging in separately to the portals of their multiple corporate banking providers. What treasurers want is to be able to connect with all bank portals by simply signing into their internal systems. Banks can meet this demand by leveraging APIs to seamlessly connect their systems with corporates’ ERP/TMS (Treasury Management Systems).  Apart from facilitating connections, APIs also have an important role in enabling banks adopt a platform or ecosystem-led business models, and thereby offer third-party, non-financial products. Using APIs, corporate banks can even allow customers preferential access to partner services. A good example here is the ICICI Bank’s Connected partner portal which offers business tools from the likes of Zoho, Paybooks etc. at a special price to all business banking customers. 

Another extremely important technology in the context of platform centric banking discussion is cloud; with all digital transformations becoming cloud-based, corporate banks leveraging cloud can co-create ecosystems, run platform marketplaces, and adopt innovative business models, such as Banking as a Service. 

Channel solutions for anytime anywhere transactions: Even channel solutions are important to enable treasurers to take actions on the go, in self-service mode, on the device of their choice. Corporates also prefer an integrated value chain covering all transactions from payments to trade financing, which  enables integrated experiences on the digital channels. Further, information reporting and dashboards may also be automated, and be made available on channel feeds. 

Last but not least, banks can present several blockchain use cases to corporates, in areas such as cross-border payments, trade finance and identity management. 

In Summary…

Digital technologies have expanded beyond retail banking to offer transformation opportunities to corporate banks. So, corporate banks which were forced to digitize to cope with the conditions brought about by the pandemic, can leverage a host of use cases to improve business outcomes. This is also imperative to meet the expectations of their increasingly tech-savvy customers. While corporate banks have embraced a digital adoption overdrive, , they need to pick up the pace and leverage modern technologies to create strong propositions to continue to reset existing competitive advantages.