Over the last few decades, banks have largely focused on digitization of retail banking. There has been very limited focus on digitization of corporate banking. Now, because of the increasing demands from corporate customers and the overall innovations happening in the space, banks are forced to relook at their corporate banking services and accordingly define their strategy for the future.
Banks looking to enhance their corporate banking solutions and services will have to undergo a complete digital transformation covering both front end (channels including mobile) and back end systems. As part of this journey banks should focus on some of the below mentioned areas:
- Digitize the Customer Journey
- Customer Onboarding and Lending processes – In retail banking, banks have invested in digital channels – online/ mobile where customers can apply for a facility and get instant approval. The next wave is to digitize the process for corporates. Banks need to allow their corporate and SME customers to get instant approvals for their applications. SMEs could probably be a good starting point, subsequently followed by mid-market and large corporates. They need to also enable enhancement requests from their customers.
- Cash Management – Corporate treasurers today deal with multiple bank relationships across multiple time zones. Banks needs to increasingly focus on providing platform in the channels where corporates can streamline the payments process, provide cash forecasting for effective working capital management, lending and investment decisions, virtual account for reconciliation of transactions and provide real time pooling and sweeping capabilities.
- Trade and Supply Chain Finance – Banks should bring the corporates, their suppliers, vendors and other players like transporters, insurers, etc. for transparent and real-time processing of transactions. Additionally, they should enable corporates to rely on electronic channels where they can initiate the transactions such as request for letter of credit, attach supporting documents.
Digitizing the customer journey will change the way relationships are managed giving relationship managers more time to focus on other value added services like advisory.
- Augment the back end processes
To improve the overall corporate customer experience banks needs to also focus on augmenting the back end processes; automate them using OCR, robotics and artificial intelligence (AI). Implementing OCR can automate reading data from a request for example a loan request / application, trade finance services like letter of credit, and bank guarantee.Banks should look at straight through processing reducing the turnaround time, resulting in operational efficiency and reduced cost for banks.
- Data Analytics
Banks have heaps of customer data about their corporate customers which if used properly can add and provide insights both to the customer and back-end user using analytics. Banks should invest in analytics tools which can enable RMs to offer relevant offerings best-suited to their customer, cross-sell additional products, and retain key customers. Similarly, it can help customers manage their business. For e.g. cash forecasting capabilities can help customers better manage their working capital requirements.
To summarize, banks must invest in digitization and have a differentiated offering for their corporate customer. They need to formulate a clear strategy to have an edge over other banks in the corporate banking space who are their traditional competitors and also FinTechs trying to foray into the space.
