Outside of core day-to-day functions such as managing liquidity and securing adequate funding, the Indian corporate treasury departments taking part in a recent study by Greenwich Associates rank 'digitisation' and 'technology upgrades' as their top priorities for the year ahead. That holds true for both the largest Indian companies and mid-cap corporates.
In India and around the world, banks and a growing group of technology companies are helping companies transition their corporate treasury and banking functions to digital applications. This requires massive investments in technology to help minimise burdensome compliance demands but in the long-term, mobile and online applications is expected to dramatically reduce cost to serve.
The report on the research by Greenwich, entitled ' Digital Prowess Will Determine Winners and Losers in Indian Corporate Banking', suggests that as a result of this long-term promise digitisation holds for corporates, India’s public sector (PSU) banks are likely to lose corporate banking relationships and market share if they are unable to make sizable investments in technology.
“In the new era, wholesale banking is a scale business,” commented Greenwich Associates head of Asia Pacific & Middle East, and author of the report, Gaurav Arora. “Now is the time to put in place the technology infrastructure that will enable scale; banks that fail to do so will be at risk of being left behind.”
Technology adoption and security
Six out of every ten corporates (60%) participating in the Greenwich Associates 2019 Large Corporate and Middle Market Banking Studies have identified opportunities to improve internal and banking processes with emerging technologies such as blockchain and artificial intelligence (AI).
However, less than 5% have adopted and implemented emerging technologies. The primary reason given is security. Two-thirds cite security issues and many are hesitant to challenge the status quo and sometimes lack the infrastructure readiness to plug in the emerging technologies.
“While security is, of course, a legitimate and important concern, companies should speak to their banks about the platforms they have built and the robust security measures they have in place,” said Arora. “Given the recent progress in this area, it’s critical that companies not allow themselves to be held back by security issues that may already have been addressed.”
India looks further afield for corporate funding sources
The government is reported to be in talks with foreign lenders, as India’s banking system might not provide the US$14.5bn sought
India’s CFOs ‘plan increased spend in 2019’
Nine in 10 believe that improving cash and working-capital management will be more important this year than in 2018
India’s RBI issues liquidity management guidelines
The country’s central bank is proposing new rules for non-banking finance companies to help them deal with severe liquidity problems.