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Need for better, integrated digital services is key gripe in corporate-bank relationships

Corporate satisfaction with their banking services is lower now than in 2013, according to a survey by CGI. One of the key priorities for companies is security as well as enhanced, integrated digital services.

The survey found that 55 per cent of the corporates surveyed said they were satisfied with their banking partners. Last year, 68 per cent said they were satisfied. This is a considerable drop in satisfaction levels and the survey findings suggests that cash management services could be one of the reasons for decreased corporate satisfaction. It found that 56 per cent of companies rated their cash management services as 'good' or 'excellent' but CGI notes this is a big drop from last year, when 71 per cent of corporates rated their service a four or five on a five-point scale. The graph below shows how corporates feel about the main services provided by their banking partners.

Source: CGI/gtnews

Fintechs upturn the corporate-bank relationship

CGI’s 2016 Transaction Banking Survey, conducted in partnership with gtnews, researches the views of both corporates and banks and compares the two. The data shows how corporates evaluate their banking partners and the levels of satisfaction with key treasury services, as well as how banks plan to invest and develop their services in future.

One of the most interesting points from this year's survey is the emergence of fintechs. Corporates are increasingly turning to fintechs rather than their traditional banking providers for some financial services and this is a profound change in the corporate-bank relationship.

Digital dissatisfaction

A key area of corporate restlessness is their need for better, integrated digital banking services. One sticking point is the need for multi-banking platforms, as corporates no longer have the appetite for logging into separate banking portals. However, banks have so far been reluctant to work on multi-banking services, preferring to maintain control over their client relationships. The survey found that the top three priorities for corporates in their banking relationships are: security, technology integration of services and digital services.

Key findings

Some of the other key findings from the survey include:

  • Corporates are more likely to be scrutinising their banking partners, compared to last year's survey. Sixty-two per cent of corporate practitioners said they are planning a review of their organization’s strategic relationship with their main banking partners. Most of these corporates (25 per cent) said they are looking to consolidate their banking relationships, while 23 per cent are planning to renegotiate their banking contracts, and 14 per cent say they need to look for new banking partners in key geographies.
  • 80 per cent of companies that are planning on assessing their banking relationships said the main service they wish to review is their cash management services. More than half (53 per cent) said they will review liquidity solutions and 42 per cent want to review payables.
  • A majority of companies (56 per cent) have kept the same number of banking relationships in the 12 months from June 2015. However, this means that 44 per cent have not and this is not insignificant. The survey found that 25 per cent of companies said that their organization had increased the number of banking partners, while 19 per cent had downsized.
  • 96 per cent of corporates said a bank’s ability to act as a strategic partner was the most valuable aspect of their banking relationship.
  • Security is the main factor considered by corporates when establishing a new banking relationship (chosen by 87 per cent of companies).
  • When banks were asked what factor they thought was most important for corporates when establishing a new banking relationship, most of them didn't see security as a top priority. The majority (89 per cent) said the main consideration was “selecting a provider that best supports the organization from a strategic standpoint”.
  • 60 per cent of corporates are working with between two and 10 banks.
  • 40 per cent of corporates have more than 150 bank accounts.
  • The three most commonly centralised functions among corporate practitioners are FX (77 per cent), risk management (74 per cent) and cash pooling or netting (71 per cent).
  • Fifty-eight per cent of corporate practitioners use a Treasury Management System. Of those, more than three-fifths use an in-house or installed version, while the remainder use Software- as-a-Service or ASP.

CTMfile take: The main theme that comes out of this report is that fintechs, technology and the urgent need for better digital (multi-bank) services are changing the face of corporate-bank relationships completely. Corporates need reassurance that their banks are providing secure, safe platforms for their treasury services and it seems as though many banks are underestimating just how important that is for customers. We will probably see more companies reassessing and scrutinising their bank relationships in future.

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