Corporate treasurers have long been tethered to their office computers when making financial transactions, but we are now starting to see the end of this ‘leash’. Mobile banking for corporates is being viewed as more attractive than ever before. Treasury professionals are looking to simplify their operations and find ways to conduct business on the road in today’s mobile and global world. Standing in line at the airport may provide enough of a window to review their company’s previous day transactions, or see whether a customer’s payment has cleared.
The shift toward thinking ‘mobile’ for cash management and other corporate finance needs is a revolution in the making – for both the users of mobile technology and the banks that offer these services. Mobile banking signals a huge movement toward transparency and speed. Many of the ‘givens’ of day-to-day treasury operations, such as waiting to find out if a cheque cleared, little real-time oversight of employee expenditures, etc – are becoming obsolete. The move to mobile is also part of a larger shift in how banks view their treasury services divisions, namely as a source of revenue for the bank.
A number of factors are at play in this shift to corporate mobile banking. At the personal level, consumers are becoming more reliant on new devices and apps. At the corporate level, companies are rethinking their treasury functions and structures. And, looking at banking’s role, banks themselves are undergoing a transformation, specifically driven by the economic and regulatory changes of the past five years. Banks are placing a greater reliance upon treasury services divisions and the kind of ‘sticky’ customer relationships facilitated by tools such as corporate mobile banking.
Examining the drivers of mobile banking reveals some interesting trends in the global finance arena.
Factors Making Corporates More Mobile
Smartphones are becoming more accepted as a way of conducting business
Analysts estimate that they will sell at nearly twice the rate of PCs in 2012. As more people use mobile apps for their personal banking needs (nearly one quarter of Americans, according to a recent Intuit Financial Services study), they are expecting the same kind of accessibility for their business banking needs. In a survey of financial executives in companies with revenues between US$20m and US$2bn, Informa Telecoms and Media forecast that mobile phones will soon be used to conduct nearly 300 billion transactions worth more than US$860bn in 2013.
The ease of banking over mobile devices allows chief financial officers (CFOs) and other treasury professionals to stay nimble and work from anywhere. Mobile banking expands bandwidth and efficiency and allows finance staff to function more fully outside the office environment. And the exploding popularity of tablet computers, propelled largely by the iPad, is adding to the demand for technology that can work on these devices.
It is worth mentioning, however, the difference between what is driving personal consumption of technology, versus business use of that technology. The bells and whistles that make the latest smartphone so attractive for people’s personal use are not nearly as important when they turn on the device to conduct business. Business use of mobile banking tech is a highly practical affair. No one cares about good-looking apps if the funds can’t clear.
Limited resources for treasury management
Executives in small and mid-sized enterprises (SMEs) have been much earlier adopters of mobile banking technology than their counterparts at larger companies. RBS Citizens research shows that owners of smaller, entrepreneurial companies are looking to manage their financial services in the simplest possible way so that they can spend more time actually building their businesses.
These business owners are also looking for accessibility and ‘anytime/anyplace’ flexibility. Small business owners may often act as their own CFOs or treasurers, necessitating quick-in, quick-out access to their financial positions from wherever they are working – even from the road or the factory floor.
Drive to simplify corporate treasury
Larger companies have more fully-staffed finance teams throughout the globe and are likely to have more entrenched treasury processes. Given these factors, they have not been as quick to implement the newer mobile banking technologies. But there is a dynamic at work in these larger companies that is changing the game. As companies are seeking to optimise their treasury operations, simplification has become a mantra. Treasurers are taking steps to simplify everything from their banking relationships (which could be with dozens of banks throughout the world), to legacy finance processes that may be left over from acquired companies.
Companies are asking themselves: how can treasury be not just a cost centre, but truly a value-add for the enterprise? What are the steps we can take to build efficiencies into the system?
In this environment, mobile applications are viewed as a tool for simplifying treasury functions and making them more efficient. Mobile spend management reporting tools, such as alerts that signal expenditures over a certain level by company employees, allow finance management to more closely oversee and reduce costs. Mobile trade applications simplify trade operations around the globe, speeding up funds transfers, order fulfilment, and transactions across the whole supply chain.
Saving days on either side of a transaction – with the greater transparency and access that mobile banking allows – is a way for treasury operations to not only create value, but help the company become more competitive.
Increasing comfort with mobile tech security
The safety and security of sensitive financial information is uppermost in treasurers’ minds. Mobile technology, like any technology, can raise concerns about the security of financial data. But there is a growing comfort level with mobile capabilities, particularly among people who have already adopted the technology, including corporate users.
Security is an area that is driving innovation in the mobile banking world. As processes migrate from the desktop computing space to the mobile space, experts are looking to translate these security measures from desktop to mobile. It is essential that mobile banking technologies have the same level of security controls as the desktop applications corporates are using, and should include multi-factor authentication, and an overall multi-layer security proposition. Mobile banking solutions can also be developed to allow account information to sit on a secure site, not the device. This approach further protects against a data breach, in the event that the device is lost or stolen.
Security of course remains a top priority for corporate mobile users, but innovations and proactive mobile use policies are helping to reassure companies that their data is safe.
Mobile Banking: Helping Corporate Customers ‘Stick’ to Their Banks
As more and more companies continue to incorporate mobile banking into their treasury and finance operations, banks are seeing a corollary shift in their business banking customer relationships. In fact, treasury services and how they are regarded within banks as a whole are undergoing a transformation.
Treasury services revenues within banks are becoming an increasingly important part of the business model for banks today. Regulatory and economic changes have led to revenue shortfalls for banks. Faced with continuing economic uncertainty, creditworthy banking customers aren’t borrowing as much. The historically large share of treasury services revenue that came from net interest margin and sweep fees are likely never to recover to their previous levels. The result is that banks are turning to their treasury services divisions to generate other forms of ‘sticky’ annuity revenue.
And mobile banking is a tool for this ‘stickiness’. By making it easier for a company to conduct business, mobile capabilities strengthen a bank’s relationship with its commercial customers. It also demonstrates to business customers that the bank listens to them and develops offerings that speak to them where they already are – on their smartphones.
A customer-centric focus sends a powerful message, and is where customers, especially corporates, are expecting banks to be in this extremely competitive environment. Mobile banking is part of a broader strategy to address corporate finance needs above and beyond the transactional.
Conclusion
As the two worlds of banking and technology go through such major ongoing transformations, new uses of mobile technology can prove to be a valuable tool to retain and add value to clients. And if there is truly a value to untethering the corporate practitioner, the mobile channel will not only be an extension of the corporate office but will gradually become the dominant choice for practitioners. This evolution will drive further development and expansion of mobile applications to capture an even greater share of business activity than the mobile apps in use today.