Automation Opportunities In Corporate Banking

It’s no secret that in today’s business climate, corporate banks are feeling the squeeze. They struggle with an installed base of pre-modern applications and archaic processes. Now is the time when corporate banks change the way they serve clients. They must start employing a mix of digital and human-enabled services that will enrich the client experience, improve cost performance, and sustain growth.

Corporate Banks Need Some Digital Love

Most banks that digitized basic cash management prioritized operational efficiency and service continuity. They invested significantly into improving retail digital consumer experiences. At the same time, they neglected the rising digital maturity of corporate clients. Banks must balance their relationship-driven approach toward enterprise clients with one built on digital channels. The embedded inefficiencies in traditional working practices make it harder to extract savings, improve pricing, and manage challenges such as:

1. A fragmented, legacy IT landscape. The systems and solutions that allowed banks to upgrade with minimum risk in the past are now a significant impediment to sustainable development and digital transformation. Today’s typical legacy corporate banking applications are still monolithic, a mixture of systems of engagement and systems of record — not cloud-ready and integrated in an ad hoc manner. Legacy core banking is the antithesis of end-to-end digital banking. It is neither flexible nor fast enough to cope with the agility and real-time needs of “true digital” seamless, end to end banking.
3. Outmoded, paper-intensive processes. Corporate banking is besieged with intensive paper processing throughout transaction cycles and across stakeholders. Most financial services providers are aware of the paperless processing opportunity. They still end up retaining paper records, however, due to legislation or weak internal governance. In this paper-centric environment, third-party vendors store records offsite for a significant cost. Banks tolerate this cost as “business as usual” and often overlook the efficiency opportunity.
4. The need to drive broad-based digital innovation. Large incumbent corporate banks have retained an edge despite their high operating costs, but the pandemic has changed market behavior and expectation. More businesses are automating their operations and demanding sophisticated digital solutions compatible with their business, yet most banks are still struggling to deliver.
5. Rigid, inflexible business models preventing agility. Banks build products and push them out to customers. They produce value upstream, and their consumers consume it downstream. There is a linear flow of value impacting pricing metrics, relationships, and, ultimately, business agility. Banks must seriously consider moving from linear to networked business models. Fintechs and other tech startups are good at exploiting this opportunity; they disrupt the industry with creative and digital business models that provide superior products and services at affordable rates.
6. Regulation, regulation, regulation. The corporate banking industry is heavily regulated — and rightfully so. There are valid concerns over security, compliance, and data privacy. Compliance infractions can have a substantial impact on a company’s bottom line: penalties, reputational damage, and the loss of important clients. The ever-changing regulatory landscape, with open banking rules, API standards, ISO, and manual compliance screening with nonintegrated platforms (e.g., World-Check, blacklists), etc., results in higher costs for banks.

Automating Corporate Banking Processes Is A Huge Opportunity

Corporate banks are under pressure to provide innovative and efficient services to stay competitive. Evolving market conditions are forcing them to reexamine their business models and adapt to a new reality. Automation is the new fabric for digital businesses and the new plumbing for systematic digitization. To that end, banks must make automation the cornerstone of their digital efforts.