Digital platforms in corporate banking: A route to increased loyalty?
Digital adoption in the corporate banking space has so far lagged behind what we have seen across retail banking. At Mapa, we have been looking recently at opportunities for providers to enhance delivered client value, and to tackle and overcome the persistent sense of inertia that has come to define client attitudes to digital banking, in order to move clients to digital channels and enjoy the active loyalty (and operational efficiencies) that come from a stellar online experience.
Some of the problems are clear. Existing digital solutions are far from optimal, generally lacking intuitive navigation and any integration between the standalone platforms required to manage different products (i.e. cash, credit, trade, FX, etc.). It’s not surprising, therefore, that clients choose not to use these tools to service their corporate accounts.
While the Big 5 UK providers can boast a basic level of account servicing functionalities across their corporate cash management platforms – such as checking balances, viewing previous transactions and making payments – the reality is that the experience of each provider differs significantly and very little is being done by way of adding value.
In this sense, where a digital relationship does exist with their provider, corporate clients typically see it as being purely transactional, and any loyalty that exists is entirely passive and driven only by a sense of inertia.
We have seen some attempts by providers to improve the in-channel experience, for example Citi (US) recently launched a mobile app that allows users to generate one-time secure passcodes to login to the CitiDirect BE platform, and HSBC (UK) undertook a large-scale refresh of its HSBCnet Mobile app.
Such innovations are key to driving engagement, as client interactions will naturally increase if they can perform more tasks more easily. However, experience enhancements alone are unlikely to shift client perceptions around the transactional nature of the relationship or to challenge the passive loyalty that has traditionally defined this relationship.
In terms of converting this client loyalty from passive to active – whereby the inertia that has defined behaviour is overcome as the client sees the meaningful value being delivered – the biggest opportunity lies in delivering value across all areas of the client business. Of course, this means providers going beyond traditional cash management functions.
A pattern has recently emerged whereby providers are evolving into active collaborators, and this type of collaboration helps create a sense of partnership and increases the relevance of providers’ digital banking propositions beyond basic account servicing. In particular, providers are beginning to offer solutions that help clients streamline and centralise disparate business processes and offering meaningful data and insights that help to inform business strategy.
Such innovations genuinely have the power to enhance business performance, for example by forecasting working capital needs and offering advance insights on how to mitigate these, and to save clients money, for example by launching a platform that centralises and automates the supply chain management process.
If such solutions can be integrated seamlessly within the existing digital portfolio – and PSD2 may play a key role in terms of using APIs to facilitate this type of integration between the various satellite platforms – providers can begin to build out their digital value propositions, and generate true active loyalty by delivering meaningful client value across their businesses. Partnering with third-party tech vendors is a viable option – and indeed one we have seen quite a bit in this space, such as ABN AMRO’s partnership with InvoiceSharing to roll out their automated accounting solution – and will allow them to do this more quickly.
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