• Ankit Shah, Head of Digital Banking at Apex Group


• 05.01.2022 09:30 am
#digitalbabking

The last two years have changed society’s relationship with technology, accelerating existing trends, and the altering the expectations we have of our banks, both as individuals and as business customers. We believe  these changes to be permanent and with the rapid acceleration of the pace of change in the retail banking space, 2022 will see interesting implications for their corporate banking counterparts.

Here we outline some of the key trends to expect in the corporate banking sector as we enter 2022. While there are definitely some recurring themes from years past, the difference in 2022 is the sense of urgency and speed at which we expect these changes to take hold.

1. Experience is everything

As digital banking becomes more commonplace for corporates, in 2022, the quality and ease of use of the digital experience will be of utmost importance. Consumers demand simple engaging interfaces and seamless experiences from their banking providers, and in the years ahead, corporate banking clients will expect the same.

 A recent survey conducted by BCG found that of 660 companies globally, 95% of the respondents that conduct their personal banking online expect the same capabilities for their corporate banking needs. Further, 90% would be interested in engaging with their relationship manager digitally – a significant divergence from the traditional model offered by the incumbent banks. Furthermore, 60% are willing to switch to a bank offering client centric digital capabilities with core day to day banking functionalities , highlights an opportunity for a truly digital corporate bank to offer a differentiated client experience and take advantage of this trend.

2. Making it personal

It is often said that data and AI are the fuel that powers all other components of digital banking transformation and in 2022, both will play a key role in shifting to a digital-first customer experience focus. By using internal technologies, and partnering with third-party solution providers, banks will look to replicate the intelligent experiences that technology firms provided so successfully during the pandemic. Just as Netflix learns more about what customers want to watch based on their everyday viewing, fintechs can help banks learn more about their customers based on their transaction data, FX requirements and banking patterns. When banks know their customers better, they can design functionality and systems to support them and anticipate their needs. To make such changes banks will need to be more nimble and move faster with actions.

3. Backoffice to the forefront

In 2022, we expect a renewed focus on reinventing back-office processes While users of digital banking platforms are increasingly focused on the end experience, it’s time the spotlight was shone on the bank office processes behind the scenes. Many financial institutions, whilst operating a seemingly digital front-end, are still supported by legacy, outdated processes and structures that rely on people, paper and wet ink.

Banks such as EDB, have combined the digitalisation of existing back-office processes with the implementation of new technologies and automation to increase efficiency and improve experiences.

By using an open API architecture, leveraging data and analytics, and automating repetitive processes, banks can more efficiently tackle tasks such as know your customer (KYC) validation and AML checks. The banking industry will also take the lead from fintech and big tech organizations deploying AI to leverage data that will help make better business decisions and streamline back-office operations.

4. Technology partnerships go hand in hand

In collaboration with fintechs and specialist providers, banks have found themselves able to deliver new digital accessible solutions to meet the needs of their  customers.

As the legacy banks before them have realised, the new generation of corporate banks are beginning to see the multitude of options available to work with third-party providers. This providers can often build and deploy solutions faster than can be done if developed in-house. In addition, these partnerships with software providers, fintechs and big tech can provide the tools to modernise existing systems and processes in parallel.

In 2022, this reliance on partnerships between organisations will continue to gain momentum, and we anticipate the further growth of external providers who can deliver scalable, flexible solutions at a manageable cost to banks of all sizes.

5. Embracing three-letter words

One of the newest trends to drive digital banking transformation, is one which has reached financial services more broadly in 2021 – ESG. As customers and employees increasingly consider an organizations’ sustainability efforts as an important criteria for doing business, digital banking must evolve with ESG and DEI in mind. This trend of sustainability will only increase in 2022, creating new opportunities for financial institutions to differentiate themselves and meet the needs of the community.

Already we have found clients welcome an online banking platform which offer a broad range of services such as digital records, eliminating the need for physical documents, helping to improve resource footprints from an ESG standpoint.

The growing regulatory imperative of the last year, including the EU’s SFDR, also sets the stage for continued private sector efforts, led by investors and asset managers, to place pressure on financial institutions to expand and enhance their ESG disclosures and continue efforts to address DEI challenges.

Data and analytics will support these initiatives, as they will allow financial institutions to integrate reporting from their banking platforms, into their wider ESG reporting and metrics.

Conclusion

While banking has changed significantly for retail customers in recent years, the experience for business customers has not evolved at the same pace – however 2022 may be the year we see this gap begin to close.

Now is the time for nimble corporate banks to capitalise on corporate clients, who in 2022, will be looking for alternative providers that not only meet their expectations, in terms of experience and products or services offered, but who are also leveraging innovative approaches to provide data, analytics and decision-making tools that increase efficiencies and help to drive growth.

In 2022, banks must commit to supporting corporate customers and providing them with the digital benefits they are demanding. Looking ahead to 2022 and beyond, the biggest challenge facing the market will be to ensure that these innovative solutions are not deployed at a traditional pace.