Digitization has drastically changed the face of banking. However, most of these changes are in retail banking. From digitizing accounts and transaction records, banks are now striving to provide seamless and personalized service to their retail customers across multiple channels.
Banks have warmed up to the idea of reimagining corporate banking and some banks that have a successful retail banking transformation experience, are gearing up to achieve the same in corporate banking. While this seems to be an interesting and highly rewarding journey, it has its share of hurdles beyond intent and budgets, which when not addressed can end in highly unfavorable results. These challenges however are mostly external to banks and are critical to a successful corporate banking transformation.
First and foremost is the very definition of a corporate customer, which differs across banks and within the same banking geographies. From a business making a few hundred thousand dollars a year to a multibillion-dollar global corporation, the corporate banking world caters to a wide variety of customers. This leads to standardized processes at one end of the spectrum and highly customized offerings at the other end.
Unlike retail customers, most of whom have access to similar types of channels and gadgets (though in different price bands) corporate customers may not be tech savvy enough. While a few use cutting edge technology and tools and are open to integrating their ERPs with the channels offered by their banking partners, a lot many might be maintaining their books on standalone personal computers if not on paper ledgers.
Another aspect is the process maturity of customers. Despite being technologically at par, different companies have a varying degree of process maturity, which makes adoption of digital banking platforms by corporates a challenge.
While it is observed that new age businesses are more likely to join the banks early in this journey as compared to the others, the nature of the business that a customer is in, the added burden of regulation and compliance for the business which may have to undergo far more changes within to make effective use of a partner bank’s offerings, will only delay the success of the banking partners in transforming the corporate banking business.
The organization culture, the adaptability of employees to change, and the ability of corporates to train their employees will play a bigger role in the success of their banking partners as well.
This effectively means that banks have to invest a lot more outside their own business boundaries to ensure the success of their corporate banking transformation. An understanding that not all of its corporate customers are similar, and a carefully devised multi-pronged approach for each of the various segments of its customers, will work in favor of the banks. For this approach to work, banks must be cognizant of the customer requirements, should allay their concerns, and more importantly must provide value in terms of the investments that the customers are willing to make.