It’s no secret that banks generate a lot of data. While still a sensitive topic from a compliance perspective, today, real-time intelligence is the source of most opportunities for both banks and their clients.   

In the corporate space, where banking clients have been progressing their own digital journeys, the demand for actionable insights is high. Corporate transaction banking is an intricate undertaking. Innovation has been limited because of regulations, siloed banking relationships, and complex workflows involving multiple business divisions and jurisdictions.  

As corporations rationalize the number of accounts they hold, demand greater visibility, and look to new providers for functions like virtual account management, banks need to step up their digital transformation efforts. Here, we look at the risks and rewards for banks looking to rethink their corporate proposition.  

The current approach is increasingly inefficient 

For data to become intelligence, it must be contextualized and categorized to give it relevance. In corporate transaction management, large volumes of highly detailed cash flows must combine to achieve accurate, real-time positioning. With data siloed across multiple systems, banks lose valuable time waiting to turn it into intelligence.  

Banks offering cash management services structure their transaction businesses differently. What’s common is costly inefficiencies caused by inflexible technology, resulting in manual tasks and little connection between products. Acquisitions, mergers, and prohibitive license agreements mean that the existing IT architecture offers little integration with new technologies.  

Legacy infrastructure blocks the adoption of next-generation systems and the ability to capitalize on data transformation. Monolithic architecture plus a high volume of corporate cash flows is a recipe for disaster – leaving banks open to security and privacy breaches. Also, since products and services aren't well integrated, mistakes made thanks to manual processes can lead to sizeable fines.  

At best, the status quo is inflexible, making change difficult. At worst, it puts profits, jobs, and reputation at risk.   

Turning linear models into digital ecosystems

Banks are losing market share to technology companies that offer specialist services to corporates that are both cost-effective and efficient.

To compete, banks must embrace open APIs, fintech collaborations, and cross-industry partnerships. For example, banks that collaborate with best-in-services providers have the opportunity to keep but also grow their position. 

An ecosystem model built around next-generation core banking platforms makes this happen. With a modern core, open APIs and pre-built integrations, it’s now far easier to reduce complexity and rethink traditional operating models. 

Banks may not be the sole provider of every corporate service, but they can remain relevant. By connecting to services that clients want to use, they increase the speed of data access so that their clients can act on intelligence faster.

With a new and diverse ecosystem of partner services and technologies, banks have a bolstered product offering while solving the data challenge at the same time.  

A new relationship between corporates and their banks

The real-time automation of key corporate cash management activities is a game-changer for banks and their clients. Think cash pooling, payments/ receivables management, and virtual account management. All taken care of with less manual intervention. With the benefit of interoperability between transactional data, this unlocks real value.   

Banks not only manage their operations better, but they can also differentiate themselves by using insights to provision products at the point of need. Real-time, aggregated data enables informed pricing decisions, decreases time-to-market for new products, and ultimately enriches communication between banks and their customers.   

With the shared benefits of platform economics, corporates can access best-in-class services while having more control over their data. They can make better decisions on their money, manage their working capital effectively, and embrace new methods. Most of all, they receive a quality user experience with the flexibility to change and scale.