Centralized Pricing and Billing for Corporate Banking

Corporate banking is rife with manual invoicing and non-STP processes in the banking industry today. Legacy core processing systems were not built to handle the rule-based requirements that are needed to price based on relationship value.

These systems challenges can and do lead to revenue leakage. TowerGroup has noted that the cost of poor data alone can amount to $70 million in revenue leakage per billion of revenues (annually!) In the face of clients who demand to be treated as more inherently valuable banks are forced to create manual workarounds (patches and build-ons or sometimes even excel spreadsheets) or else replace or renovate these core systems.

Based on the type and quality of service that corporate clients expect banks need to be able to package and bundle banking products on a client by client basis. That's one half of the equation - but the other half is how do you price that kind of bespoke customization? Ideally your core system can measure the relationship value and provide a price quote that profits both parties. If it can't, then we're back to workarounds and spreadsheets.

Beyond that there is the issue of invoice standardization. Multinational corporations today expect a certain standard with respect to how they are presented with their banking activities and fees charged. They generally don't want to have to sift through invoices in different formats - they want a single view of their accounts. They want to know where they stand and what they are paying for and why.

Banks should not rely on the longevity of existing relationships to predict future business. In the same report it was noted that over 50% of corporate clients surveyed would be interested in switching banks based on better account management capabilities or better customer service. These days banks need to earn their loyalty. 

With data like that, centralized pricing and billing systems are quickly becoming a strategic imperative in corporate banking. An enterprise billing system can reduce revenue leakage and increase efficiency in billing systems leading to further cost savings. In the short term, as more banks implement these pricing and billing systems, the risks will shift to those banks who find it difficult to quickly respond to the changing needs of corporate banking clients.