Insights EMEA conference: corporate banks and their pains
At the D+H customer event in London, Insights EMEA, there has been a lot of talk about innovation, blockchain (of course) and where corporate payments are heading. Whilst D+H and its Global Transaction Banking Solution (GTBS, formerly Fundtech) unit are, understandably, promising their clients better solutions – so we won’t dwell on that – it is interesting to hear what their customers see as major pain points and investment foci.
The lifecycle of payments
The payment landscape is evolving at all stages of the payment lifecycle – and with this come multiple challenges – so what is keeping corporate bankers up at night?
Business continuity is vital, states Sherie Morais, executive director, head of cash management sales and advisory at National Bank of Abu Dhabi (NBAD). Abu Dhabi has been recently hit by heavy rain and hail storms, causing a lot of damage to the buildings and infrastructure, she says, and it was an eye-opener on what a challenge it might be to keep the lights on and the systems going.
Away from natural disasters, Morais highlights the importance of “understanding and appreciation of the diverse preferences that various markets have.” The UAE, for instance, is “very cheque-heavy”, so if a bank wants to do business in the region, it must support this type of payment alongside digital offerings. “It is a very interesting market as it combines manually intensive operations with very advanced automation.”
Dan Pilling, global payments technology CIO at Barclays Bank, echoes the sentiment. On the one hand, Barclays customers (particularly on the retail side) expect immediate payments on mobile devices (“hardly anyone writes cheques any more”, he observes), but on the other, corporates still send faxes to the bank.
There needs to be a culture shift, Pilling says, encouraging the customers to be more self-sufficient and use phone and online rather than fax and paper.
Business continuity is also a priority for Barclays – “customers want services 24×7, with no downtime because of changes and upgrades”. The bank is upgrading its payments systems to address the latest regulatory requirements, amongst others.
This requires “more automation throughout the cycle of change”, Pilling adds.
An interesting comment here from D+H’s Gene Neyer: customer expectation of a 24×7 service is welcomed by the likes of Google and Amazon as they see it as more hours to do business and service customers, but is dreaded by banks.
Who do you want to be when you grow up?
Mary Ann Frances, a former banker and now executive advisor to Wipro’s global treasury and payments services business, comments that banks should decide “what they want to be when they grow up”. Do you want to be a broad services and products provider or a just a pure-play clearing bank, she asks. And once you decide, get the technology to suit.
How often, Frances asks, do banks have genuinely new platforms? More often than not, it is an old system wrapped in layers of newer technology. “Like putting a lipstick on a pig.”
And talking about old versus new, isn’t it often the case that the banks tend to shy away from recruiting tech-savvy 25-ish year olds? But then again, do they want to work for a bank? Not likely. They’d much rather send their CV to the likes of Google. So it comes back again to changing the culture, she comments. And that is not an easy task.
Zero revenue game
Ah, the formats and standardisation. “Formats are here to stay,” states Frances. “Changing the formats is a zero revenue game.” She advises against forcing the change on corporates.
Corporates and “in-house banks”
Banks, beware – many large corporates these days are building their “in-house banks” to save costs on doing business with their banking services providers. She gives an example of a large multinational that is bringing together its 99 (!) ERPs to create a centralised platform to be able to send one file to its bank instead of ten files. Less files to process, less revenue for the bank.
Banks are often not too keen to bring on the changes and modernisation – mainly due to their fear of losing revenue. So, corporates find ways around it.
“Remember when banks would insist on taking cheques from corporates rather than encouraging payments via an ACH as clearing a cheque would cost a corporate 15 cents as opposed to 10 cents if done via ACH?” she asks.
So what are the priorities for the corporate banks today when it comes to investment? For Unicredit, it is in “taking all the complexity away from customers”, says Giulio Carmignato, SVP and head of global products at the bank. “This is our path for the future.”
For NBAD, “investment is key now that the transaction banking has come to the fore”, but it has to be “selective investment”, says Morais. Outsourcing versus in-house systems – what does it mean for longevity? Blockchain and other emerging technologies – what are they and how to apply them?
Barclays’ Pilling is putting cybercrime and fraud under the investment spotlight, “especially as we are moving towards instant payments globally. Once a payment is gone, it’s gone.”
Want to know what the corporates complained about and what they want from their banks? Click here to find out more.