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Corporate bank priorities shaped by digitisation and fintech collaboration

Research from Finastra shows changing priorities for corporate banks and their customers over the next five years. It reveals that corporate banks are moving away from the traditional ‘relationship builder’ approach of client interaction and management (where they build wider banking relationships with clients to cross-sell additional services) towards being ‘platform players’ that offer value-added services and can deliver real-time execution.

"The pandemic has brought the future forward, forcing banks to adapt their operations in lending, trade finance and cash management, and accelerate digital transformation," said Torsten Pull, SVP and general manager for Corporate Banking at Finastra. "To thrive, these organisations must change their business models, adopting new infrastructures that support the journey towards digital, end-to-end, platform-driven corporate banking. We wouldn’t expect this shift to remove the role of the relationship manager, rather digitisation enhances their ability to access insightful data for quicker decision making.”

Digital budgets increasing

The research, which gauged the views of over 700 heads of relationship, technology and product across global corporate banks, shows how their priorities are changing over the next five years in line with their corporate clients’ requirements. The responses show that corporates will prioritise online banking, value-added services, and real-time service and execution above their banks’ range of products and services and relationship management in the next five years.

Corporate banks must respond. Appetite for change exists, as digital transformation budgets within these organisations are expected to increase by 2025. In the cash management and trade finance space, banks expect digital development budgets to grow by around 30%. With regards to lending, banks expect digital development budgets to increase by 20%.

Addressing corporate client needs

As relationship management falls in priority and the pandemic highlights gaps, corporate banks are changing their focus. Cloud technology and digital signature are the main tools that banks need as soon as possible. Around 19% of banks said that cloud is needed for their response to COVID-19, but that they don’t currently have access to this technology (across cash management, lending and trade finance).

Digital signature was also cited as a requirement, but 18% of banks do not currently have access to this (across cash management, lending and trade finance). Over 80% of lenders said that account validation was a key digitisation priority too.

"The need to deliver faster, more agile and more tailored corporate finance solutions across sectors is driving corporate banks to embark on a digital transformation journey," Torsten added. "The agility and expertise of fintech partners will be essential, as will collaboration via open platforms. As these trends ramp up, our research shows that around 70%-75% of banks are already working with fintech partners, or plan to do so in the next year. It’s a change to be embraced which will help to accelerate growth."

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