A survey by Finextra Research and Misys reveals that 45% of banks say their ability to provide a joined up service to corporates is average or worse. But to counter this, more and more banks are consolidating lines of business into a transaction banking group, and investing more in new products delivered online.
According to the survey, which takes in the views of 100 product management and director level bankers, IT complexity is seen as the biggest obstacle to transaction banking plans ahead of "domination of global banks", cited by 55% and 40% of respondents respectively. At the top of the list of technical problems that banks say their customers want them to solve are greater integration with corporate systems and delivery of cross-border, multi-currency cash pooling services.
The research found that a majority (57%) have already taken steps to restructure their organisations, bringing together trade services, cash management and payments services as a single offering. A further 19% have plans in place for specific transaction banking units within the next 12 months.
Despite these changes, 45% of respondents -- including half of those who have already restructured -- believe existing customers rate their services as no better than average, suggesting either that the new structures have yet to bed in or that other difficulties prevent them from reaching their potential.
"The research backs up what we have found from our own customers, comments Guy Warren, EVP and General Manager, Misys Banking. "In the current downturn in the financial industry, banks are searching for value-added banking services, which involve low capital usage but promise stable earnings and return on equity. There is a huge shift towards providing new and improved transaction banking services delivered online, so that they can both defend existing corporate business and win new customers. There is a fantastic opportunity for fast moving banks to create credible alternatives to the services offered by global competitors in their multinational heartland as well as going after the smaller corporates and SMEs who tend to operate under the radar of the global banks."
Adding new products and services to satisfy existing customers, and widening their appeal to the smaller customers are the top priorities for 39% and 33% of respondents, respectively. Offering new cash pooling offerings are particularly effective, with banks already seeing an average 14.4% increase in business as a result.
Although nearly half of banks in the survey said their overall 2009 IT budgets had been frozen, average spending on development of cash management systems and services is expected to increase by 7.9%. As the primary delivery platform for new services, the online channel is the main focus of IT spending. Cash forecasting, invoice and payment reconciliation and real-time payment tracking feature prominently in online investment plans of a third of respondents in the next 12 months.
Guy Warren adds: "Banks have either completed or are well on the way to completing the first stage in their transaction banking strategies. Stage two is about getting the delivery platform right, which is a matter of building viable online channels that feed smoothly into corporate systems. Only then can they deliver the integrated transaction banking services to satisfy both their customers' requirements and their own desire for growth."
The report is available from the Misys stand at Sibos in Vienna, from 15-19 September, and also available for download on Finextra.com at www.finextra.com/misys-report.asp.