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Top 3 external forces driving corporate banking change

In its Corporate Banking 2020 Research Outlook, research firm Celent establishes the idea that corporate bankers face a 2020 landscape shaped by the following three powerful external forces:

  • Remaining competitive in the midst of a technology arms race.
  • Enabling a business model transformation for corporate treasury clients.
  • Funding growth by driving productivity.

The outlook, written by Celent’s head of Corporate Banking, Patricia Hines CTP, notes that corporate banking remains an attractive growth segment, with projected revenue growth of 3-4% over the next few years. Cash management and payments continue to offer especially attractive returns for those banks able to remain competitive.

Competitiveness shouldn’t be assumed, however, as the largest global banks engage in a technology arms race in an effort to grab an out-size share of revenue pools. New and improved client-facing propositions will dislodge large revenue pools from corporate banking incumbents that fail to innovate in the face of billions of dollars committed to technology innovation by Tier 1 banks.

Manual processes combined with limited treasury staff continue to be top operational challenges for treasury and financial professionals. The report says that banks are well-positioned to help clients to transform corporate treasury, incrementally digitalising and digitising their operations, enabling step change with new liquidity management tools, and introducing new, game-changing technologies. Some banks have started down the road to Treasury 4.0, but non-bank tech providers are outpacing the banks, putting additional revenue at risk.

The report points out that incumbent banks continue to struggle with inflexible, expensive legacy systems combined with inefficient support processes across product silos. To drive profitability and release the budget needed for growth initiatives, banks are looking for ways to generate efficiency gains while reducing pain points for customers. Client-facing processes such as customer onboarding and loan origination are obvious candidates, along with less obvious candidates such as traditionally siloed payment systems and operations.

These forces imply a set of specific technology priorities that banks should embrace. Celent says that it is going to focus its research efforts on helping bankers (from line of business executives to technologists, strategists to implementers) educate themselves about key technological questions, prioritise their spending, and execute their strategies. The firm points to its new vendor discovery tool, VendorMatch, as playing an increasingly important role in its vendor analysis.


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