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Welcome to a virtual reality: how virtual accounts are transforming corporate banking

The modern banking landscape has changed fundamentally at the hand of digital transformation. Retail banking disruptors such as Monzo and Atom have ripped up the rule book on what effective banking looks like, and consumers have voted with their feet. Corporate banks have traditionally been slower to innovate and, in a post PSD2 world, this has been a source of frustration for corporate customers who expect to see the same degree of transformation as experienced with their personal bank. As a consequence, corporate banks have found it more challenging to not only win new business, but retain existing business. However, the rise of virtual accounts is changing the tide - providing customers flexibility and improved productivity, making corporate banks more competitive in the process.

Virtual accounts and Open Banking

Traditionally corporate treasurers have been accustomed to a slower innovation cycle compared to their consumer counterparts. This doesn’t have to be the case and it’s very telling that a recent PwC report indicated Open Banking could quadruple in size by 2022 and be worth £7.2bn. As a result corporate banks are keen to catch up and match the consumer market in the innovation stakes. Open Banking promises to create an environment where corporates can have streamlined access to multiple banks. This will empower the corporate treasurer to look for more capabilities from their bank.

Virtual account software acts as an umbrella layer connecting all existing systems and accounts, providing a single view on holdings across all external bank accounts and internal ledger systems. In this way virtual accounts provide a mechanism for corporate banks to deliver those services which are top of mind for clients. We recently conducted research in partnership with Ovum Consulting that found corporates are primarily concerned with real-time cash forecasting and improved analysis of receivables. Virtual accounts enable this, helping control corporates’ disparate accounts across multiple geographies, in one platform.

Virtual accounts help banks win business

Virtual accounts present a clear benefit for corporate banks because of the day to day business problems they can solve for their customers, which may explain corporate’s openness to switching accounts and bank’s appetite to providing virtual accounts services to prevent them from doing so.  Our research showed that 50 percent of European corporates have considered moving their main banking relationships in the past year and 94 percent of banks believe providing virtual account services will enable them to win new business.

While not all corporates may be aware of virtual accounts or their benefits, there has been a significant rise of corporate clients to include virtual account capabilities in their tenders to address the cash management challenges firms face on a day to day basis. Corporates are clearly happy to shop elsewhere if the service or functionality they receive from their bank is not up to the task. Corporate banks also benefit as increased flexibility for the corporates simplify the requirements on the bank’s systems because fewer real accounts are required. According to David Bannister, Ovum’s Principal analyst Financial Services Technology, “Corporates are asking for new functionality that solves their problems. Banks are cottoning on to this, and realising that virtual accounts are a tool to solve client problems.”  

In this sense virtual accounts are providing a solution that many corporate customers simply haven’t considered yet and corporate banks have yet to put forward en masse. Those banks that welcome this new ‘virtual reality’ will have first mover advantage, reaching new customers, boosting existing client relations and increasing revenues in the process.



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Tim Martin

Tim Martin

Product Manager


Member since

07 May 2015



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