Fintechs and challengers will struggle to break into the corporate banking space as banks innovate their cash management systems and work more closely with their clients. That’s according to a panel at the Global Business Banking Forum in London, made up of Soren Rode Andreasen, chief digital officer at Danske Bank, and Sohail Raja, chief digital officer at Société Générale.
“Now customers are coming to the big banks for advice [rather than product-based services]. The top problems for them used to be about meeting the regulatory challenges in their field, but now it appears to be Brexit,” said Andreasen.
Dankse Bank revealed in its 2018 financial review that the institution had lost some 11,000 retail and corporate clients in Denmark following its money laundering issues, while $307m is set to be spent on improving anti-money laundering (AML) systems.
“Large banks have a lot of data around clients and what they do,” added Raja, “we also know about the products and advice they might be looking for. When it comes to the use of data, banks are some of the largest data stores around. We understand the parameters.”
There is still room for third-party cash management solutions in the corporate banking space, said Raja. “Clients on the large corporate side are looking for solutions from the banking relationships they already have, but the providers are also bringing in third-party information to help them with that, alongside their existing digitisation of cash management platforms.” It’s becoming “increasingly important” to the corporate client that they are able to view information about all of their accounts, regardless of which bank they might be held by.”
According to RFI Group figures, presented by managing director Victoria Bateman at the event, 56% of business banking customer “show an appetite” to switch provider by the start of 2020. A quarter of those surveyed by the company stated they wanted to increase efficiency in handling their accounts, while another 20% cited a reduction in debt as a major priority. 54% of those studied by RFI Group used online banking services at least once a week.
“Even though large corporates aren’t the focus of PSD2, there is a demand for being able to get an overview of their positions in different countries,” added Andreasen. “For some that is actually a lot of work, so I see open banking applying there. We already have that to some extent, as we have a core banking platform which extends across multiple geographies. This makes us less prone to disruption, but I do see more of that in the future going forward.”
“Clients want to see their balance, move money around and look at their FX exposure. They want to see all the information from all the various banks they have relationships with as well. There are a couple of fintech startups trying to come into this space, but they have to go through the process of becoming regulated, and getting the right capital behind them.” The best route for fintechs, added Raja, would be to partner a large bank.
“There was a time a few years ago where the prospect was more frightening. You saw some startups appear and really show progress in scaling up. Then you look internally at some of the teams at banks, what we’re doing with cloud and devopps. Clients want a feature and want you to deliver that relatively quickly, and we can do that, without a delay of one, two or three months.”