The COVID-19 crisis accelerated change in a manner that was unprecedented. Businesses that had never left the office moved to fully remote work in a matter of days, and entire business processes were turned upside-down as even the most risk-averse business were forced to find new ways of working.
As a result, the speed of business stepped up a gear. The c-suite had no choice but to demonstrate new levels of leadership and decision-making process. A long-term strategy was replaced with short-term survival, and this shift changed the job roles of the leadership team. One role particularly impacted was the role of the CFO. They needed complete visibility into their finances and a banking provider that understands their business innately.
Firms don’t have time to wait for their banks to understand their business. Nor do they want to wait for banking services to be set up for them. The new CFO wants self-service tools and end-to-end integration from their banks.
The CFO now wants real-time information for decision-making
During the height of the pandemic, CFOs were forced to step back from longer-term responsibilities such as organizational change, strategic leadership, and financial planning. They needed to make decisions quickly, using real-time information based on data analytics that gave them accurate information to forecast needs for liquidity, financing, and solvency.
This turnover accelerated change in the finance department. Manual processes became automated and banking services became integrated into core systems. Digital and finance finally intersect. The shift to a digital-first approach is well underway.
Corporate customers are now looking for efficient digital communication channels that allow them to frictionlessly obtain the information they need in real time. Omnichannel is the answer, a method that offers the corporate customer the largest number of communication channels that are seamlessly linked together so information flows efficiently between each.
Delivering this service has made banks invest in unifying their platforms so that the customer can reach all banking services from a single portal giving them access to their entire portfolio of contracted products. Beyond this, corporates are looking to integrate banking services into other platforms such as corporate ERP systems, further enhancing internal decision making.
For the banks, the shift to digital is an opportunity. It allows them to scale up their services, and refocus solutions around their customer.
Data-driven decisions can be used to learn behaviors and predict when clients need banking services
Data mining of transactional data is a huge opportunity for banks. It helps banks learn the nuances of their customers (and their customers’ customers), and understand trends that could be attributed to industry or region.
With this information, banks have the opportunity to move from being reactive with customer service to being proactive, placing their services where customers need them in real time.
For instance, by running a cash forecast for the next 2 months, a bank could detect a client with a liquidity surplus for the next 3 weeks and offer a bond purchase so the client gets a return on that surplus.
ESG – a key driver in the coming years
ESG is a key driver of opportunity and growth in the coming years. Companies that can prove their green credentials – for example through certification – will be able to leverage this to secure preferential financing. Banks could become the gatekeepers of ESG information, using transactional data to generate a specific set of ESG KPIs per industry and region.
By using traditional financing products linked to a certified sustainability metrics, banks can influence corporates to reduce their own carbon footprint.
Also, based on that set of KPIs, banks could create an ESG benchmark for each industry and offer clients advice on how to become more sustainable.
The new way of extracting information in real-time using technologies such as APIs and connectors, together with ESG metrics, and the deep knowledge of the corporates’ daily activity, brings the opportunity for banks to develop a specific CIB set of products by industry and size.
Certainly, the role of Corporate Banking is changing and, at NTT DATA we understand that the objective of reducing costs, together with a growing demand for sustainable economies and the inclusion of COVID-19 as an accelerator, highlights a need to transform the entire banking ecosystem.