Since the onset of the pandemic, evolving customer expectations has forced banks to adapt and support their corporate clients with enhanced automation and digitisation.
“The future of corporate banks depends on their ability to provide the digital experience that corporates expect and demand in this rapidly evolving environment,” said Carlos Teixeira, global industry principal at Finastra.
With that, corporate banks have been driven to re-evaluate how they position themselves and deliver their services.
“Over the next five years, banks expect their digital transformation annual budgets to increase by 28.9 percent, and 68.6 percent of banks are either already engaged with, or are planning to engage with, a fintech partner to help them provide their clients with the ability to self-serve via digital banking channels,” he added.
Digital transformation has reimagined traditional relationship models, encouraging a shift away from conventional relationship management and towards digitally-powered platform players.
As expectations for agility and flexibility continue to rise during a time filled with uncertainty, banks have begun to realise the value of the platform approach in providing an open architecture that can be altered and refined to meet new customer demands – a requirement demanded by corporates from their banks.
“Banks worldwide were requested to shift from the traditional ‘relationship builder’ approach of client interaction and management – building wider banking relationships with clients to cross-sell additional services – to being ‘platform’ players, delivering digital enabled, real-time execution,” said Teixeira.
With clients expecting faster response times, digital banking services, and visibility over the entire banking relationship, Teixeira explained: “The objective is not to remove the relationship manager from banks, but to equip them with data and information to help them make informed, flexible and personalised decisions, quickly.”
Banks in the Middle East, in particular, are moving directly towards becoming platform players in the next five years, according to Finastra’s ‘Trade finance: the departure from relationship models’ report.
Supporting their journey to becoming platform players, open banking is democratising data access and payment services by facilitating shared access to customer and transaction information.
From large banks launching personal finance management apps, to stand-alone specialists developing innovative digital payment tools, open banking has slowly emerged as a catalyst for the next generation of financial innovation.
With that, open banking is expected to impact the trade finance and corporate banking sectors significantly, with 57 percent of respondents stating that trade finance would see the greatest impact, while 55 percent believed that corporate banking would, according to Finastra’s ‘Financial Services: State of the Nation Survey 2021’.
Taking the notion of open banking a step further, open finance’s potential to accelerate the future of finance is exponentially increasing.
“Open finance is considered the natural evolution of open banking. It will bring several benefits to financial services – with shared data and infrastructure creating the framework to support this transition, and enabling the unique opportunity to embed or extend the appropriate financial services, directly to the client where they need it,” said Teixeira.
By combining their own data with market and industry information, and integrating everything on one platform, banks will be able to understand the scale of the market, better assess counterparty, operational and political risk, and become the trusted advisor to their clients.
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