Seven in 10 corporate treasurers polled from enterprises across Europe, the Middle East and Africa (EMEA) believe that a shift from bank to non-bank services will take place within their organisations over the next two to five years, a report from financial services software provider Finastra suggests.

One in six believe the shift has already taken place, according to the report titled ‘Digital Disruption Comes to the Corporate Treasury’, which concludes that the market dominance of banks delivering corporate treasury services is under threat from non-bank market entrants.

The survey finds that EMEA corporate treasurers are considering using non-bank service providers for a wide range of core services including payments (71%), FX platforms and liquidity pools (both 67%) and trade and supply chain networks (56%).

The move is well underway, with 76% of survey respondents reporting that their business has already integrated with trade networks to link supply chain financing with payments. More widely, only 24% of respondents say they now exclusively use their bank to facilitate payments, with others choosing alternatives including the SWIFT global payments innovation (gpi) initiative (46%) and alternative cross-border payments services (43%).

Top priorities

Demand for non-bank corporate treasury services comes as treasurers look to leverage technology to drive value and enable real-time payments. Asked to name their top priorities for the year ahead, the treasurers surveyed cite technology enablers such as real-time payments reporting (74%), cash management technology (66%) and risk management technology (58%).

A major proportion also note the opportunities offered through more advanced technologies such as artificial intelligence (AI) and machine learning (40%) and mobile channels (31%).
Survey responses also show strong demand for open banking-enabled services among corporate treasurers, with 29% stating it was a key opportunity for their business in 2019.

Asked about the benefits of standardised application programming interfaces (APIs) in the context of open banking and Europe’s Payment Services Directive (PSD2), European respondents cite factors such as lower costs (58%), cash visibility (55%), and new services being made available from non-bank market participants (53%), while 83% of all respondents said they would like to use dedicated corporate APIs provided by their bank.

“Demand for convenient, real-time, digitally-enabled services has finally come to the corporate treasury,” commented Anders Olofsson, head of payments at Finastra.

“Banks have become occupied with complying with legislation like open banking and PSD2. That compliance focus hasn’t enabled the banks to proactively educate corporate treasurers about new technology. Treasurers have had to adopt a sort of self-learning.

“Corporate treasurers have spent the past 20 years streamlining back office processing to be cost efficient. They have done their homework on cost driving, increasing straight-through processing (STP) and more. Now they are looking at initiatives like open banking and thinking, ‘what if I can view my cash positions in an open banking scheme, instead of using expensive infrastructure or relying on banks?’

“Treasurers are seeing first-hand the benefits of powerful technology platforms that use open APIs to connect cutting-edge services and are open to collaborating with third parties to benefit from these technologies. Banks need to act fast to strengthen their relationships with customers and offer the innovative services they demand.”

Patrice Amann, regional leader financial services industry EMEA at Microsoft said: “As we move into a new era of open standards, APIs, and interconnected business models the cloud will underpin new business ecosystems that will enable corporate treasuries to thrive and their businesses to grow. Those that fail to participate in these ecosystems might stay behind and face risk of disruption.”

Gareth Wilson, global payments lead at Accenture added: “Businesses are increasingly looking to their banks to become more connected in the digital economy, so they can better manage their businesses with faster real-time payments and open banking. We are moving into a world where transactions clear and settle within minutes and a number of technology players can supply vital business services.

“Banks will need to take care not to be demoted to the plumbing of payments and build on the trust they have with their commercial customers. Competition is heating up in the battle for the business customer.”