Banks can improve product and services offerings for treasurers and generate more revenue if they realize the “digital opportunities” that corporate-to-bank connectivity, payables and receivables automation, and trade and supply chain finance can provide, according to a new report from Celent.
“Done properly, the continued digitization of products and services across corporate banking delivery channels improves service delivery, increases customer satisfaction, and unlocks new opportunities to grow fee revenue,” according to the report, Delivering Better Treasury Service Through Digital Transformation.
When it comes to bank connectivity, companies use a wide variety of structures, including online cash management portals, host-to-host file-based connectivity, SWIFT network connectivity, and other multibank networks sponsored by technology providers. The challenge for banks is to be able to cater to as many systems as possible, Celent says, paying particular attention to the constant improvements in technology.
“While the segment is evolving, however, banks must continue supporting all of the various historic flavors of corporate-to-bank connectivity,” Celent says. And although there is no one-size-fits-all solution, “forward-thinking banks will offer a continuum of connectivity approaches.”
Payables and receivables provide another opportunity for banks, says Celent, which recommends the continued build out of “payment hubs.” “The development of new payments hubs projects will continue to drive client retention and bank fee revenue as corporates seek more efficient delivery of payment services,” Celent says in the report. That’s because corporates can benefit from the accelerated on-boarding, improved customer service, reduced error rates, enhanced STP, and improved fraud protections that these hubs provide.
Meanwhile, on the less glamorous receivables side, banks should continue efforts to be able to collect in a wide range of payment forms, including the seemingly indomitable check, which persists (particularly in the US) even as some countries have abandoned it. And even though checks are declining worldwide, “there are so many checks in the system that banks supporting US business clients need to support check receivables for the foreseeable future.”
And while many banks have abandoned or outsourced receivables, there is still an opportunity for those banks still in the business to work closely with their corporate clients “to improve receivables automation through file translation and cleansing, highly enhanced matching, and workflow guidance for efficient management of exceptions.” Banks can also use information from the “sources and flows of receivables and remittance detail to identify product line enhancements and cross-sell opportunities.”
Finally, with the global trade environment shifting due regulations and uneven world GDP growth, banks face increasing challenges in trade and supply chain finance. Also, trade will be increasingly focused in emerging economies. Therefore, Celents says, this increased focus “highlights the need for increased digitization of paper in the physical and financial supply chains to streamline trade transactions and capture data for regulatory reporting and trading partner risk analysis.”
“There are a number of software providers automating and facilitating trade and supply chain finance transactions (see related story here), but as a first step, critical supply chain documents such as purchase orders and invoices must be digitized and transaction data accurately captured for downstream processing,” Celent says.
In order to deliver “demonstrable and sustainable economic value” for clients, banks must address all aspects of their current connectivity, payables and receivables, and trade and supply chain management structures. In this way they can get a better idea of the changes the need to make.