Research by East & Partners, a specialist corporate and banking market research and analysis ﬁrm, has found that more than seven out of 10 of the world's biggest companies use a non-bank fintech provider for at least one of their business banking needs. According to the report, Financial Technology and the Corporate, the most common services that are entrusted to non-bank providers are treasury functions, cross-border payments and FX, risk and compliance reporting, and cash management.
The East & Partners report on corporate use of fintech and banking is based on interviews with 737 of the Top 800 global corporates, specifically with the individuals responsible for their firms’ business banking relationship(s). It interviewed executives in companies based in Australia, China, France, Germany, Hong Kong, Singapore, the UK and the US. Some of the highlights from the report include the following findings:
Corporates looking outside traditional relationships
71.5 per cent of the world’s largest corporates currently use a non-bank fintech provider for at least one business banking need, although the adoption rates vary widely across products and markets and, according to Sangiita Yoong, an analyst at East & Partners Asia in Singapore, this is in line with the broader market trend where multi-banking is on the rise. Yoong notes: “Corporates are spreading their core relationship banking further, as evidenced by declining wallet share for primary providers in many product areas.”
Areas where corporates turn to non-banks
The report also found that corporates are using a non-bank provider mainly for the following types of product:
- treasury functions (27.7 per cent);
- cross-border payments and foreign exchange (20.5 per cent);
- risk & compliance reporting (19.7 per cent); and
- cash management (10.2 percent).
Yoong also commented that “Corporates across the globe are attracted by the efficiency gains offered by these non-bank providers.”
Chinese and German corporates lead the way
Nearly three in ten (29 per cent) Chinese businesses are using a non-bank fintech for their cross-border payments and foreign exchange needs, more than any other business banking product. A similar proportion – 30.8 per cent – of German corporates are following suit. Yoong adds that treasurers and financial controllers in Mainland China are influenced by the positive experience of being exposed to world-leading payment capabilities and ideas in their private lives. The report found that executives in China, Hong Kong and Singapore said that fintech solutions are making it easier to run their businesses but that banks are somewhat lacking in their ability to keep up with innovation.
'Big four' banks strong in Australia
The report also found that the incumbent 'big four' financial institutions in Australia provide 94.6 per cent of the businesses’ cross-border payments and FX needs, leaving little space for any providers outside the mainstream. Yoong comments: “This is unsurprising given the relatively high levels of satisfaction expressed by customers of ANZ and Westpac, for example, in particular for their cross-border payments services.”
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