Traditional banks have yet to fully realise their corporate digital offering and many are still in the process of ‘duplicating’ their branch offerings in the digital space says Alessandro Hatami, managing partner at Pacemakers, a tech consultancy firm.
“Banks are currently focused on interface and user experience, how to do what they were doing in branches in the digital world,” he said, speaking yesterday at the online Money Next Summit. “That’s phase one, the ‘adapt’ phase. The following phase is how do they optimise processes in the back-end to make sure that these front-end processes are done well, that’s the ‘evolve’ phase.”
Louise Døvling Andersen, first vice-president at Danske Bank agreed, saying that retail banking is ahead of corporate banking in terms of digital transformation but is quickly catching up.
“[Several] initiatives are going to have a profound change in B2B banking. One is open banking, not necessarily a new tendency, but something that has really picking up over the past few years is the simple integration of APIs”.
Bain suggests that as the pandemic increases the number of non-performing loans, banks need to offer more of their non-credit services to their SME clients, adopting a more customer-oriented approach.
Andersen added that digital transformation is also changing the way banks offer their services.
“For a number of years, we have seen subscription models, tier solutions, and very simple pricing being offered by banks like Revolut. It will be really interesting to see if they would go into the large corporate space with a model like that because in that part of the market, pricing and product is still very granular and negotiated at a very detailed level.”
Hatami uses the music industry as an analogy for the future of corporate banking.
“The incumbent banks are the Tower Records and the HMVs. The challenger banks are the iTunes of this world but the Spotify of the banking world we still don’t know who they are. “
In comparing with the music industry and the transition from iTunes to Spotify, he says that consumers didn’t actually want to ‘own’ the music they just want access to it and that something similar is happening within corporate banking. As corporate banking becomes more focused towards open banking and the use of APIs, corporate customers are also transitioning towards SaaS solutions rather than owning and operating their own ERP or TMS.
“The biggest challenge that the incumbents and the challenges will have is mindset. It’s legacy, but not IT legacy per se, but the organisation’s process legacy.”