Current trends and drivers in corporate banking: a way forward for modernisation | NTT DATA

Fri, 28 October 2022

Current trends and drivers in corporate banking: a way forward for modernisation

NTT DATA held a webinar to explore the big priorities for corporate banking in 2022: here’s our overview, with a couple of key drivers very much at the forefront.

Amongst the many fast-moving parts in modern corporate banking, we’re seeing two key trends racing right out in front in 2022. These were explored in a roundtable and webinar we hosted along with Alte-Novarica, with experts from global Spanish and German banking.

Getting the service right

Big driving trend number one? A further push towards banking as a service (BaaS) and the knock-on requirement for connected banking that comes with that. Neither will come as a surprise, and both have been on the agenda for banking for many years. But particularly in 2022 and beyond, both have become of particular importance, the forefront of banking modernisation work.

What came through very loudly was making sure the user fits into all of this: they have to be at the heart of these efforts. Don’t make the changes that benefit the bank per se, make the changes that benefit the client. BaaS and modernisation has clear benefits to both bank and client of course, but the services offered have to be agile, and have to properly adapt to customer demands.

One very useful aside as part of the conversation: the strong recommendation to work from a good and clean data environment. That’s not a current priority for a lot of banks, and perhaps it should be. If a clean data base is not in place before modernisation work is undertaken, it’s creating problems further down the line.

Streamlined

For banks, services offered need to hit regulatory demands too, and to work tightly with corporates. Onboarding needs to be as simple as possible, not least for corporates who struggle with their own bureaucracies. But also as modernisation offers a growing number of touchpoints and a more spread tech stack, there remain benefits to having one source of ‘truth’. Simple things like being able to approve payments from one system, based on processes that aren’t over-engineered (over-engineering and over-the-top complexity remains a real danger in modernisation).

Corporates can and do, of course, work with multiple banks and systems, and complex third party systems aren’t helping streamlining work. The need for reduced complexity for corporates comes through loudly.

Full approach

Corporates aren’t shy about their demands – when have they ever been? - and have their own roadmaps and targets. The modern banking industry has to support, and not obstruct, those.

Each bank is different as well, and some are moving towards new architecture and ways of operating. There’s no one size fits all solution in this world. Still, as many have found, modernising isn’t simple: it’s not just about the technology, it’s everything that underpins services: back office work has to support it, for instance. Modernisation has to be wholistic, else it’s not answering the right questions.

Connectivity

Underpinning modernisation is better connectivity. The representative of one of the Spanish global banks explained the challenges it faces for us: our entity is a major global bank, and it needs to offer speedy services to its customers wherever they are.

It notes that clients in different parts of the world are asking for different types of connectivity, and the bank’s platform has to support it all: whether they need ERP system support, or AVS connections, or something else entirely. A representative of a German retail company explained that it now has three different types of connectivity with banks, which in turn builds in redundancy in case of any problems.

The processes of the connected modern bank not only have to support this, but are expected to be sustainable, global, and able to facilitate fast-changing and evolving clients.

The bank and its systems cannot hold its customers back.

For the banks themselves, their concern can’t be how a client decides to engage and connect with it: it has to service the request that comes in, come what may. There’s advanced, cutting edge work going on here. The representative of the German global bank noted that some of its most advanced clients are eschewing APIs for instance, and aiming for no in-between layer between the systems of a corporate and its bank. The communication is as direct and seamless as it can be, albeit that comes with no shortage of effort, and no shortage of trust.

The upside though is that the bank becomes an extension of a corporate’s systems, and intertwined with it.

Sustainability

The second big trend explored was that of supply chain finance, and ESG commitments. Clients are demanding more environmentally sensitive and sustainable services, and again, banks have to be responsive to that.

It’s not easy, but the results can be quite something. A company of the food sector case study was explored, where the business wanted to decarbonise its supply chain, involving much time and setup. A lot of contracts needed to be signed (e-signatures were used, so less paper came out of the printer!), but also it brought in this case the food sector company and the Spanish global bank closer together: they worked in tandem to create mechanisms to help meet the broader goal.

The end result was that the company of the food sector was the first retailer to hit such a decarbonising goal.

Is there a potential here to offer tailor-made similar solutions to other clients, who are also concerned about their ESG work? Absolutely. It’s another way – another opportunity – for the modern bank to better serve its client base.

Supply

There was just time to touch on supply chain finance (SCF) too, and the question of acquisitions: all leading to the ability to make life easy for suppliers, through technological modernisation.

It’s not easy, and regional variations here are often stark. There are many companies keen to get into SCF more and more, but it’s a complex world where one territory’s systems can vary wildly. A platform alone isn’t enough: client demands have to be keenly listened to, and their needs met at the same pace as everyone else.

Client, client, client

Bringing all these changes and trends together is the customer.

The core message that came through is listen to clients, respond to clients, meet client expectations, and prioritise modernisation with clients in mind.

Of course, efficiency, agility and service have long been priorities for the banking industry. What we’re seeing is that modernisation is making – and better than ever levels of service - more important than ever.


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