By James Buckley, VP & Head of Europe, Infosys Finacle
As nimble FinTechs and alternative lenders continue to encroach on the corporate banking space, it is vital for established players to deliver high quality services to attract and retain clients. Although incumbents have scale and mindshare on their own side, failure to deliver next-generation services that their corporate clients expect, could see today's market leaders losing primary relationships within as little as four years. Not surprisingly then, several leading banks have begun charting a course towards increasingly client–centric in their products, services, and procedures. What does this mean in practice?
The growth and development of open banking frameworks and real-time payments processing services has driven a fundamental shift in what corporates expect (and, increasingly, demand) using their banks. Banks face the challenge of transforming decades of inherited processes and systems into lean, agile operations. This new method of working will create the foundation for future-ready offerings, including greater self-service capabilities, intraday liquidity, real-time payments, and much more.
The coming years will be very crucial for corporate banking operations, for the reason that they will determine not just the failure or success of most, but also the survival of some. Without the right tools and domain-specific expertise, implementing the target operating model poses significant challenges. For example, although many banks offer a corporate portal, inefficient and fragmented underlying technology can make it prohibitively complex and costly to reveal self-service capabilities to front-end users securely. Offering tailored services and products, based on client contract pricing, is more complex still.
As real-time gross payment systems and Open Banking APIs create the possibility to structure liquidity in additional efficient and agile ways, the doorway is currently wide open for nimble competitors to win this business and increase their share of wallet.
As banking institutions prepare for Open Banking, they'll quickly encounter the challenge of the fast-evolving and non-standard application programming interface (API) regime. Within the wake of the Revised Directive on Payment Services (PSD2), more than 400 API sets have emerged in Europe alone-and the differences between these methods to integration are not trivial. Knowledge of this space is essential, but banks face fierce competition when it comes to recruiting top talent.
What's more, containing costs and standardising global operations, all while grappling using the constantly changing operating model, remains an enormous challenge for banking COOs. From the product perspective, the proceed to intraday services creates the need to adapt existing offerings towards the systemic changes. And for IT leaders, there is often a substantial technology deficit within the areas of real-time payments and Open Banking.
To stay relevant in the digital age, it's crucial for corporate banks to reimagine their businesses with client experience at the centre.