Apex Group: Is a new era dawning for corporate digital banking?

Q1. What impact did COVID-19 have on the digital banking landscape?

The COVID-19 pandemic has now changed our relationship with technology – across society as a whole - and expectations of our banks both as individuals and as corporates. We expect these changes to be permanent. The events of 2020 drove the banking sector to rapidly accelerate their digitalisation plans, including joining forces with third parties and technology partners to deliver services to their retail customers. As the pandemic forced branches to close due to lockdown and social distancing measures, it supercharged existing trends within banking, with some changes such as the rise of digital payments already embedded in our day to day behaviour. This rapid acceleration of change in the retail banking space has posed interesting questions for corporate digital banking counterparts. 

Q2. How have individuals and corporates’ relationships with their banking providers changed?

Over the past decade, the way in which individuals interact with banks has changed considerably as technological developments have transformed the industry. In the consumer space, there has been a seismic shift away from branch-based banking, led by the disruptive forces of the so-called ‘challenger’ or ‘neo banks’, and new digital platforms by high street lenders. 

In 2020 and early 2021, those who have digital access to their personal bank accounts, have started to ask why the same can’t be true for their business banking. Corporate clients are experiencing the benefits of digital banking in their personal lives, and naturally have increasing expectations to be able to access the same efficiencies in the business environment. Corporates are now seeking a true digital banking platform which can offer greater efficiency, reduce costs and time involved in traditional banking processes such as onboarding, payments and enabling remote working in a post COVID-19 world.

Q3. Has corporate digital banking kept pace with these retail digital banking trends?

While banking has changed significantly for retail customers in recent years, the experience for business customers has not evolved at the same pace. Unfortunately, with a wealth of legacy infrastructure and systems, traditional banks are struggling to provide a fit-for-purpose, modern digital banking offering for the corporate space, much less providing a tailored service for financial services companies. 

While the challenger banks fight for the business of consumers and some turn their attention to SMEs, there remains a gap in the market to serve more complex corporates and financial services firms eager to benefit from the advances of technology to enhance their processes and efficiencies. 

The financial services sector itself is lagging behind in access digital banking for asset managers, alternative funds, family offices and other investment vehicles. Given the highly regulated nature of financial services, concerns remain over security, compliance and data privacy, including data storage, privacy and protection; digital identity authorisation; and local regulatory pressures or different regulations for different jurisdictions. The complexity involved in running accounts for asset managers, due to a labyrinthine regulatory environment, makes them unviable for many traditional banks operating in the asset management space.

Q4. What is the outlook for corporate digital banking and onboarding?

Although there has been much change in recent decades, the pace of technological innovation means we expect banking to become even more sophisticated in the coming years. In collaboration with fintechs and specialist providers, banks have found themselves able to deliver new digital accessible solutions to meet the needs of their consumer customers. 

New developments will have a profound effect on how businesses bank in the future. For example, blockchain and distributed ledger technology will offer limitless opportunities, from financial transactions to automated contractual agreements, particularly as it removes the need for authentication. Meanwhile, advances in AI will be able to help spot and defend against cyber-attacks. Further innovations in cloud-based software as a service and development of infrastructure could also see more non-core functions transferred to the cloud. This new technology will require greater oversight, additional legislation and the strengthening of existing regulatory regimes.

As we emerge from the pandemic in the second half of 2021 and accept some of the permanent behavioural changes it has brought about, banks must commit to supporting corporate customers and providing them with the digital benefits they are demanding. Banking services and products for corporates need to be convenient, accessible and, above all, flexible. Looking ahead to the remainder of 2021 and beyond, the biggest challenge facing the market is to ensure the innovation and collaboration that consumers have come to expect from their banks, is delivered for corporate customers.


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