Banks need to accelerate the pace of innovation if they want to retain corporate treasurers as clients, with 70% in the Europe, Middle East and Africa (EMEA) region anticipating a shift from bank to non-bank services within their organisations over the next two to five years according to research from Finastra.
One in six of its survey participants believe the shift has already taken place.
The fintech giant, formed by the union in 2017 of Misys and D+H, surveyed 380 corporate treasurers from enterprises across the EMEA region. It found that the areas most under threat from new market entrants are core elements of the transaction banking business, including payments (71%), FX platforms (67%), liquidity pools (67%) and trade and supply chain networks (56%).
Nearly three quarters (74%) of corporate treasurers surveyed regard access to real-time payments reporting as the key treasury opportunity for 2019, while 67% of corporate treasurers expect a seat on their company board in five years
Banks' grip loosening
The survey findings are presented in Finastra’s report, Digital Disruption Comes to the Corporate Treasury. It shows the move to non-bank services already underway: 76% of respondents say their business has already integrated with trade networks to link supply chain financing with payments.
Only 24% of respondents say they still exclusively use their bank to facilitate payments, with others choosing alternatives such as SWIFT global payments innovation (gpi) at 46% and alternative cross-border payments services at 43%.
Demand for non-bank corporate treasury services comes as treasurers look to leverage technology to drive value and enable real-time payments. Asked 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 sizeable minority also note the opportunities offered by more advanced technologies such as artificial intelligence (AI) and machine learning (40%) and mobile channels (31%).
Finastra’s survey also reveals strong demand for open banking-enabled services among corporate treasurers, with 29% citing it as 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 the revised 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 state 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, Finastra.
“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.”
Microsoft and Accenture both contributed to Finastra’s survey. 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.”
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