There’s no escaping the fact that technology is changing the banking and treasury scene. And, as we head towards the end of 2019, one of the most notable trends from the year has been the acceleration of the disruption caused by technology.
Whether it’s ‘traditional’ TMS providers pushing the boundaries of what they offer, fintechs challenging these traditional players or even so-called ‘big tech’ players making moves into the finance space, treasury and banking is in a period of unprecedented change.
Should banks be worried about these developments? Will the big tech players – Google, Facebook, Apple and Amazon – start to take the finance world away from banks? Not at all says Clayton Weir, Chief Strategy Officer and co-founder of banking technology solution provider FISPAN.
“Banks should act like big tech, in my opinion,” Weir states. “Despite entering the space and encouraging innovation, big tech is on the same team as banks. Its companies like Google and Facebook that enable banking services in a way that the industry must adopt. For big tech companies, it’s not about moving money or payments, it’s about delivering services that are as frictionless as possible to increase the quality of the banking experience and exceed customer expectations.”
Painting a new picture
When asked how banks can shift their mindset, and become more customer focused, especially on the B2B front, Weir says banks need to put the same amount of time and investment into business banking and their corporate customers as they do retail banking. And that starts with removing pre-conceived attitudes.
“Banks have adopted a fintech mindset to some extent. They’re aware of the language of design thinking, the need for rapid prototyping and agility. But it’s often focused on the B2C landscape. That thinking needs to shift into the B2B world.
“What’s really interesting is that the B2B world is just as ready for transformation as B2C. People have this picture of grey suited, corporate relationship manager types dealing with people who are also very ‘corporate’. This is probably the same picture they’ve had for 50 years! However, when you spend time brainstorming with a bank relationship manager, and indeed a treasurer or director of finance or CFO about their business and their pain points, you realise that these people are in their 30s or 40s and are complete digital natives. They’re used to technology, slick interactions and going mobile first. Why are they going to turn their expectations off when they walk into the office?”
While mindset clearly is holding banks back from truly transforming their B2B services, Weir is clear that it’s not the only problem.
“Mindset is clearly part of the uphill battle but it’s not the only factor. Banks are beginning to adopt the language and the attitudes of agile and customer centric design and experience design, and trying to change the culture within the banks themselves. However, this is against a backdrop of risk and compliance, which I think are more exaggerated issues in the corporate space as large corporations have a lot more zeros involved in any given transaction than you see in the consumer space.
“Then, treasurers and accounting teams are more aggressively asking their financial institutions to be both technology partners and operating partners. That’s forcing change.
“Interestingly this can work both ways though. We’ve seen financial institutions experimenting with new ways of banking to corporate client working, which really starts to put a lot of pressure on corporates to change their workflows and their business processes. Corporate are designing a lot of things in their business around the way their bank makes them work. This is driving some truly big changes because you’re really forcing a corporate to go back and rethink the ways they work. It’s a very big tech way of thinking.”
With the above in mind, what are the technology trends, in Weir’s opinion, that are proving transformative in B2B banking, especially from a treasury perspective?
“I think there are a handful of really powerful trends that are the building blocks of the new wave of banking. One is absolutely APIs and the standardised way that tech systems can talk to each other. This tech has enabled the really big platform businesses grow and become so dominant, yet it’s a concept that has only really taken off in in financial services in the last few years. Banks have made massive investments in APIs, that and it just gives them a tremendous amount of flexibility to be innovative and to extend themselves deeper into their clients’ domains and do those kinds of things.
“The extension of that trend is open banking. Around the world, open banking has sprung up and even if it’s not highly active or maybe even successful yet in some markets, it is a great conversation starter for banks and people to think about how banking would work in the future. That has driven some technology investment.
“Beyond that, I think identity and authentication is having a big impact. OAuth open authentication protocols, which are used by a lot of modern tech companies to allow you to use your Google login to open different applications under one sort of verified identity, could play a big role in future design.
“The final technology trend is platformication in general. The business tools that a treasurer uses to run their business now, like a NetSuite or a SAP 4/HANA, are themselves becoming massive, semi-open platform ecosystems. And so, the treasurer’s expectation – and that of the finance department’s – is for any business process they need to tackle to be able to go into the platform used.”
Starting to think like big tech
So, given moves are being made by corporates and banks to adopt the technology used by big tech firms, when does Weir think we will really see banks thinking like big tech?
“I think they’re doing it a little bit today and we’ll see thinking evolve faster and faster, especially the big banks. They’re training their people, they’re adopting kind of the language of the mindset, they’re investing material sums in their innovation and their technology programmes. And so, month after month, year after year, they get a little bit better. If you look at the middle slice of banks, so 900 of the nearly 10,000 banks in the US, it’s going to be a challenge, because they really are so reliant on their vendor ecosystem and they need their back office suppliers to really get this and deliver.”
Weir concludes with one final thought about banking attitudes to big tech firms. “My final thought – and concern – is that I don’t know if the banks truly grasp in their bones yet that big techs are fundamentally not trying to do financial services. What they are trying to do is enable some other client experience and the money movement or the money holding is just part of that. That’s a pretty fundamental jump in thinking if you’re a bank, right?
“If banks grasp this thought and then focus activities around the operational outcomes of their corporate customer, what they’re trying to do and why they’re trying to do it, they will succeed. But that’s going to be a longer journey, I think.”