21 July 2017
Enrico Camerinelli

Enrico Camerinelli

Enrico Camerinelli - Aite Group

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Killer Corporate Banking Use Cases for Fintech

22 February 2017  |  26071 views  |  2

Although banks may appear slow to react and less agile than emerging fintech companies, banks remain their corporate clients’ main point of reference for technology innovation and inclusion. Even many leading corporations don’t want to be the pioneers in something that is not part of their core business and keep a wait-and-see attitude toward fintech innovation, expecting advice from their banks, which are perceived to be more reliable and knowledgeable in assimilating technology innovation into tangible business benefits.

Financial institutions can meet this challenge by understanding their clients’ key pain points and starting the journey equipped with the most effective approaches to fulfilling customer expectations. The question of what technology solutions corporations want from banks is therefore best answered by “translating” into “corporate language” the value of the solutions that fintech innovation currently offers to banks, not just in terms of the startups that have redefined the term in recent years, but also in the context of the major fintech vendors that are well-entrenched within global financial institutions today.

Meeting the demands of corporate customers is no easy task, especially on the corporate side of the bank, in which many stakeholders are involved. Although the treasurer is the traditional counterpart of a bank relationship manager, other corporate executives (e.g., procurement, logistics, sales, IT) act as influencers, and their needs should be represented in the advice and services that financial institutions extend to their customers.

In such a complex ecosystem, Aite Group research identified the following business priorities that companies are focused on to optimize financial operations:

  • Operational efficiency
  • Increased efficiency in trade and working capital finance
  • More real-time cash, liquidity, and payment management capabilities
  • Ready access to credit and better utilization of corporate assets
  • Minimized financial and operational risks

The overall objective for banks is to find the most appropriate technology solutions to meet their corporate customers’ specific needs, relying on fintech companies’ technical proficiency and agility, and partnering with them instead of fearing disintermediation.

Operational efficiency: Corporate banking technology combines the value of best-of-breed components on a platform that enables integration and cross-business cohesion. Banks can leverage modern business intelligence tools and application programming interfaces (APIs) that draw on the latest database technologies, visualization tools, and processing capabilities.

Efficiency in trade and working capital finance: Banks can offer an expanded online window for trade products and supply chain financing, allowing corporations an overall view of purchase orders, invoices, and asset-based financing, and performing the full range of pre- and post-shipment finance. Additionally, a financial services platform, either initiated by a bank, a consortium, or a bank-agnostic platform, delivers on the bold vision of a “platform of platforms.”

Real-time cash, liquidity, and payment management: A multibank payment, messaging, and cash management hub enables integration between enterprise resource planning programs and bank channels as well as downstream bank applications and payment and settlement networks.

Access to credit and better utilization of corporate assets: Workflow-based applications are the most compelling technology in the commercial lending arena today and ultimately extend credit access, efficiency, and transparency to the corporate user, and enable banks to better advise corporate clients on how best to access or utilize credit.

Minimize risks: Comprehensive treasury services platforms with real-time and dynamic dashboards deliver a consolidated view of client limits and exposures across all corporate banking products, and—where possible—multiple legal entities, financial provider relationships, and accounts, including compliance tracking of sustainable business goals alongside Know Your Customer indicators and business intelligence tools. Treasury platforms will be deployed on a Platform-as-a-Service basis, enabling bank and external developers to design and publish innovative treasury services applications on top of the core treasury platform.

Financial institutions must clearly understand that what a corporate procurement, supply chain, or information officer wants is not necessarily the same as what the treasurer wants. Advisory services, enabled by a unified view of the customer, can drive value-added service. Banks are articulating their innovation strategy by partnering with new-breed fintech firms and strategic software players instead of fearing disintermediation. Fintech startups, on the other hand, understand they can capture more opportunities when sitting side by side with banks in a collaborative manner.

 

TagsWholesale bankingTransaction banking

Comments: (2)

Ben Singh-Jarrold
Ben Singh-Jarrold - Misys - London | 22 February, 2017, 17:29

Hi Enrico, further to this great report see this infographic which covers some of the concerns of corporates and how bank fintech use cases can marry up with these demands: http://pages.misys.com/rs/111-MBW-889/images/Misys_Infographic_Killer%20fintech.pdf 

For other readers you can also access the full report via the infographic I believe.

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João Bohner
João Bohner - Independent Consultant - Carapicuiba | 23 February, 2017, 12:48

@Enrico,

unwittingly (or not) you have disclosed the killer use case for Corporate (or any) Banking:

"...a consolidated view of client limits and exposures across all corporate banking products..."

And to reach that, at a 'decent' cost/benefit, with online and real-time agility, the ONLY way is to manage banking 'corporately' (single knowledge base), rather than 'by-line-of-business' (silos).

This means to change/disrupt current technical (dis)architecture to an Holistic Enterprise Architecture, which also means not to think 'out-of-the box', but forget the box!

Agree?

joao.bohner@gmail.com

 

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Senior Analyst for Corporate Banking, based in Europe. Current research focuses on Global Transaction Banking, Supply Chain Finance and Working Capital Management.

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