In the new world of digital payments, many technology developments are driven by customer experiences. Banks are investing heavily in technological innovations and Fintech relationships to provide better payments experiences to their customers. Even so, there is a stark contrast between the payments experiences of retail customers and corporate customers. While retail consumers can enjoy seamless, immediate, always-available payment services with advances such as mobile and contactless payments, corporate customers struggle with rigid paper-based processes, fragmented products and relationships, poor visibility into payment flows and more.
However, I see a shift starting to happen in the corporate payments landscape as corporates start demanding the ability to transact in real-time, in an omni-channel environment, 24/7. Banks such as HDFC, HSBC, and others are already launching their corporate mobile solutions in areas including cash management, trade services, reconciliation, authentication and operational support.
Market dynamics are driving corporates to restructure their operating models, and are driving banks to adapt their corporate payments offerings to meet these new expectations (as shown in Figure 1):
The (re)emergence of virtual accounts is a key trend to watch, with banks such as BNP Paribas, RBS and Barclays leading the way in offering virtual accounts to their corporate customers. Virtual accounts provide corporates with better control over their cash management accounts, reduce administrative costs and optimise the number of real bank accounts, thus eliminating the need for cash management products such as notional pools (at least in the same currency). Banks can also consider extending virtual account management features in a multi-bank environment for the corporates who bank with multiple banks.
Corporate portals are another product that banks such as CitiDirect, J.P. Morgan and Barclays have in their corporate payments service portfolio. A corporate portal presents corporate customers with a single view of all their banking services and activities, and for banks it can support greater cross-sell of products, making it easier to roll out new and enhanced digital services.
Key features include:
- Multichannel access, seamless user experience across web, mobile devices and offline channels
- Availability of 24/7, real-time, up-to-date information
- Integration with corporates’ ERP systems and banks’ infrastructure
- Tiered dashboards at the enterprise/product/business level with decision-making tools
As banks strive to deliver against corporates’ expectations, they need to invest in new payments technologies, move closer to corporate customers, and integrate themselves into their value chains. If banks themselves don’t move quickly to seize this opportunity, then somebody else will do it first—thus relegating banks to back-office utilities running accounts for others’ front-office payments offerings.
At Accenture, we recommend banks focus on the following three key areas to sustain corporate relationships and grow future revenues from an expanding array of solutions centred around corporate payments:
- Become a trusted adviser on corporate customers’ problems; don’t just sell corporate payments products.
- Collaborate and partner (instead of competing) with Fintech companies to provide innovative digital services.
- If you’re a local bank, use digital to stay relevant and compete with global banks.
Accenture recognizes the challenges banks will have in balancing innovation with handling ‘run-the-bank’ issues such as regulation and the inflexibility of legacy systems. Those banks that can execute on both fronts most effectively will win out in the race to forge durable, profitable relationships with their corporate customers.
Read more in the full report, Transforming the corporate payments landscape