Online corporate banking has evolved (Strategic Focus)

Introduction

Online delivery of corporate banking services has been a talking point for years. Ever since the emergence of the internet as a highly successful new distribution channel in the retail banking space, it has been widely expected to be only a matter of time before providers of corporate banking services followed suit.

Report Highlights
Highlights

Many banks have realized that their relationships to corporate clients across several product lines are often not transparent, resulting in bad visibility of P&Ls with regards to positions and cashflows. However, recently, some of these banks have started taking active measures to get their corporate banking businesses back into shape; There is less 'pull' from corporates demanding better functionality from their banks, but there will be an increased 'push' by banks in an effort to retain their front-office delivery presence inside the walls of the corporate treasury.
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TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
key messages 2
Corporate banking is evolving but the industry still needs to improve profitability 2
Moving from a product to more of a customer centric orientation is key to achieving growth 2
Banks are replacing legacy systems with componentized application development 2
Banks are 'pushing' more in an effort to retain their front-office delivery presence 2
Banks are in an ideal position to help corporates take advantage of SEPA 3
Table of Contents 4
Table of figures 5
Market Opportunity 6
Corporate banks are now offering more advanced functionality online 6
Online delivery is increasing the need for integrated views across products 6
Business drivers 6
Corporate banks are looking to increase bottom line profitability 6
Customer segmentation is key to achieving growth in corporate banking 7
The recent financial markets turbulence has created significant challenges in the corporate banking sector 8
Technology drivers 8
Ongoing advances in web-based technology have resulted in strong uptake of online delivery models 8
Banks are increasingly replacing legacy systems with componentized application development 9
Going forward, growth will depend on customer segmentation and tailored propositions 9
Small-cap corporates (<$10m turnover) 10
Mid-cap corporates ($10m - 250m turnover) 11
Large-cap corporates (>$250m turnover) 11
Banks are racing to offer open and flexible connectivity options to corporates 11
Back office integration is key priority and convergence of front office interfaces is second 12
Relationship management touch points must be supported by better integration of back-office silos 13
Cross-product rationalization of direct connectivity interfaces is starting to take off 13
Convergence of front-office interfaces continues, but is concentrated on vanilla transaction services 13
Customer Impact 14
Banks are 'pushing' more in an effort to retain their front-office delivery presence 14
SEPA will offer banks wider area to service and will intensify competition 15
For consumers, SEPA will allow faster, more efficient and cheaper payments 15
Banks are in an ideal position to help corporates take advantage of SEPA 17
Corporates' relationship with SWIFT is evolving 17
SWIFT initiatives can help corporates overcome some key challenges 18
Banks can offer value added services to corporates via SWIFT 18
Challenges lie ahead for banks, corporates and SWIFT 19
Cash management and trade finance will be closely integrated in the near future 20
Trade finance inefficiencies with the corporate structure lead to payment delays 20
Banks are responsible for effectively managing data from trade finance transactions 20
How can treasuries improve their trade finance processes? 21
Adopting a centralized transaction hub is key for integrating trade finance and cash management 21
Competitive Landscape 22
Customized nature of deployments 22
Regulatory environment 22
Standards 22
Vendor categories 23
Online delivery / front-office specialists 23
Front-to-back office players 23
Corporate banking product specialists 23
Vendor positioning 23
Geographic focus vs. size / type of institution 23
Europe 24
US 25
Emerging markets 25
Corporate banking product coverage vs. integrated delivery focus 25
Corporate banking coverage 25
Integrated delivery focus 26
Go to Market 27
Buy vs. build 27
Target market 27
Recommendations 28
Targeting top-tier institutions 28
Targeting SMEs 28
Corporates need to ensure their vendor solutions can accommodate multiple standards 28
APPENDIX 29
Methodology 29
Further reading 29
Ask the analyst 29
Datamonitor consulting 29
Disclaimer 29
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Figure 1: Differences in business models across the three corporate banking segments 10
Figure 2: Different phases of competitive differentiation in corporate banking 12
Figure 3: Geographic presence vs. size / type of institution 24
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