Banks must replace ‘old digital’ to improve corporate treasury offerings
The ‘digitisation’ of banking provides an opportunity for banks to improve their treasury service offerings for corporate clients, according to a report from analyst firm Celent.
While transaction banks “have long embraced the concept” of digital through as it created electronic transaction networks such as Swift, they now face a second wave of digital expectations from key corporate customers and must change and execute a digital strategy that maintains fundamental banking strengths, while simultaneously satisfying the expectations of key corporate customers, says the report, written by senior analyst Patricia Hines (right).
According to Hines there are three areas where digitisation can “improve customer satisfaction while increasing revenue”: corporate-to-bank connectivity, payables and receivables automation, and trade and supply chain finance.
“All three product lines already use extensive automation and digitisation, but they are using ‘old digital’,” says the report – the technology is often dated, and many of the initiatives have “merely electronified a manual process rather than used technology to transform the process”.
In the area of corporate-to-bank connectivity, one improvement would be the simplification of interactions with clients, providing timely and useable information in the right formats. Corporate clients have two basic questions, says Hines: “Where is my money, and how much do I have?”
Although many banks have reaped the benefits of system rationalisation and error reduction through the deployment of payment hubs, payment frameworks, and other integrated payables solutions, additional opportunities exist for further automation, says Hines. Some of these are hard to quantify, such as the effect of accelerated on-boarding on revenue retention and enhancement, others are clear, including improved time to market for new products.
Increased automation of receivables – which “have long been considered the less glamorous stepchild of payments, despite being just on the opposite side of the financial supply chain” –is high on the agenda of banks, driven by the desire to increase fee revenue.
The report recommends that institutions work with clients and specialised technology vendors in this area, but also take a holistic approach to the issue and consider it in the contact of payables automation and the “straight-through-processing continuum required for the strongest business case”.
The report is available from Celent.