Financial institutions (FIs) are now faced with a highly competitive corporate banking market.
While the types of services needed by corporate clients are broadly the same as they were before the COVID-19 pandemic, these clients have taken to a new, more agile way of doing business in the new normal.
Below are just some of the corporate banking services that your financial institution will need to offer to remain competitive for the foreseeable future.
1. Advanced Commercial Analysis
Banks have long provided services such as portfolio, leverage, and equity analyses.
However, most corporate clients can already perform these kinds of analyses internally with fair accuracy, thanks to the wider availability of finance tools.
With updated digital solutions, financial institutions can remain relevant in this space.
Leveraging advanced AI modeling and existing datasets can enable financial institutions to make more in-depth and accurate analyses, allowing them to maintain relevance in today’s corporate banking space.
2. Better Employer HR Services
FIs have long offered healthcare insurance, payroll services, and retirement plans to corporate clients, either as core products or as value-added services.
Institutions that do not specialize in these services can still become highly competitive in these areas by updating their systems to reduce intradepartmental data siloing and to bring about a smoother customer experience.
Being able to offer these enticing financial products on top of other services can give FIs a powerful way of winning and retaining corporate clients.
3. Customized Financing
One-size-fits-all finance solutions are no longer compelling in today’s corporate finance markets.
Thankfully, the smarter data management and analysis offered by advanced digital payments systems and any modern digital payments solution allow FIs to easily present custom financing options to individual clients based on realistic risk modeling.
This allows FIs a means to closely match the needs of specific clients while limiting the institutions’ exposure to lending risks.
4. Real-Time Cash and Liquidity Management
New payment systems allow the real-time management of large amounts of cash and other assets.
Not only does this empower FIs to deliver more effective basic services to businesses, but it also opens up the possibility of offering other financial services, such as wealth and treasury management.
The availability of these services from their preferred FI may give existing clients a reason to expand their current dealings.
5. Digital Letters of Credit
Even in the 2020s, letters of credit are still often largely paper-based.
The reliance on paper-based processing makes some kinds of automation difficult, presenting procedural bottlenecks that delay the release of cash.
This is especially problematic in contemporary banking contexts, as current business models emphasize financial agility, which often results in businesses choosing FIs that can process credit faster.
Fortunately, updating to a new digital payments solution from a reputable vendor can vastly simplify a commercial bank’s move away from paper-based letters of credit.
6. Smarter Investments
The same advanced AI modeling that facilitates better commercial analysis services can be used to provide better, steadier returns on clients’ investment portfolios.
The higher performance may give FIs that cater to businesses a solid way to attract and maintain clientele.
7. Smarter Foreign Exchange Services
Due to the highly globalized nature of today’s markets, the vast majority of corporate clients require foreign currency with which to buy imports and pay for services sourced overseas.
Updated systems can potentially allow FIs to deliver more compelling foreign exchange services that help businesses save money.
Being able to offer better forex services is likely to help your institution maintain competitiveness given the current state of globalization.
8. Less Data Redundancy
Given the fast-paced nature of business today, most clients will not appreciate it if they have to repeat information multiple times, particularly during customer service calls.
Most of the time, this unfortunate situation is caused by client data being overly siloed. Over-siloing can lead to a lot of wasted time, confusion, and dissatisfaction with the FI’s services.
By updating to a newer system that’s designed to facilitate automation, data siloing and redundancies can be reduced, saving time and improving the overall customer experience.
It should also allow different departments and business areas to have an accurate and unified picture of each existing customer.
Create Novel Opportunities for Your Bank by Offering New Corporate Banking Services
Emerging challenges in the corporate finance sector are making it important for financial institutions to consider updating their systems. The main challenge has much to do with the shifting nature of corporate finance itself.
Though they may have historically been a source of stable business, corporate clients are now more likely than ever to switch banks.
Medium-to-large businesses are universally under intense pressure to be more responsive to the needs of their markets and stakeholders. This often means that they are forced to choose financing options that can take them where they need to be.
By offering a more responsive digital payments solution and other relevant services, commercial banks can better tap into this need, ensuring competitiveness for the foreseeable future.
Tommy Gallagher is an ex-investment banker and founder of TopMobileBanks.
He is an early participant in banking digital transformation and fintech development. His consulting clients include prominent startups in the US and Europe.
Here on topmobilebanks.com, he is covering macro trends in the digital banking industry.