Banks are innovating digitally in order to meet the needs of a new generation of enterprise customers.
This was the major finding of IT services provider NTT DATA’s latest annual global banking report which compared the latest demands from the largest corporate businesses with the current investment priorities of global banks. The report identified a shift in post-pandemic corporate banking towards more integrated, digitised, sustainable services aligned to the new generation of millennials taking up senior positions in corporate businesses.
The research was conducted across 12 countries and interviewed 880 senior decision-makers across banks and corporates to gain an understanding of how corporate banks must futureproof themselves. It found that accelerated adoption of technology combined with generational shifts in clients, and the ongoing recovery from a global pandemic has fundamentally changed banking.
Corporates are now three times more likely to communicate primarily with their bank through APIs versus communicating person-to-person. The traditional corporate banking image of personal client relationships is confined to history as corporates prioritize end-to-end digitization and frictionless banking. Some 85% of banks report they are working on rationalizing their portals, a change driven by client-centricity and improving the customer experience.
“Our research found the future of corporate banking is more integrated, more digitized, and more sustainable,” said Miguel Mas, Director, Global Corporate Banking with NTT DATA. “New regulation is one driver behind change, but ultimately, it’s a generational shift that’s redefining how banks need to operate. We’re seeing the speed of corporate banking is accelerating, and the pace of technology change is increasing too. Banks are investing in new technologies such as AI and automation, all driven by customer demand.”
The research found that banks increasingly need to fuse their services with the evolving needs and demands of their customers. More specifically, corporate demand is shifting from traditional trade and working capital products to more structured products. Technology is changing too. Banks are starting to bring in more automation and they are using advanced machine-learning-based models in areas such as credit risk analysis.
There was evidence that banks need to listen to their corporate customers and their specific industry needs to deliver the services they demand. For instance, 70% of construction companies report unmet demand for omnichannel corporate cash management and lending solution. Product offerings still sit outside the integrations of their commercial banking platforms.
ESG has become a key consideration for corporate banks. As the world looks to the future, regulators and policy-makers are becoming more vocal about the need for greater adoption of ESG. They recognize that moving towards a low-carbon economy is going to create additional complexities for financial services firms – and increased risk too as companies they service adapt.
Corporates want to bank with a firm that reflects their own views and beliefs as a new generation of corporate banking clients are prioritising the environment and sustainable banking. The study found 48% of corporate respondents wanted their banking provider to invest in more “green” or sustainable products and services. This demand is being met – to an extent. On the banking side, 44% report they are already investing in it.
“Sustainability is a key battleground,” concluded Mas. “Almost half of corporates want more investment in this area from their banks and the most forward-looking are building ESG-focused product teams to work on solutions to satisfy this need. It’s also a business opportunity that could gain them an edge over competitors.”