Supported and devised by Finastra, the webinar was hosted by Veronique Lafon-Vinais, associate professor of business education, Department of Finance at The Hong Kong University of Science and Technology.
The event drew on groundbreaking research conducted by Finastra that canvassed the views of over 700 corporate banks, asking for their opinions on both their own business and – importantly – their customers’ anticipated needs as the digital revolution continues to gather pace.
“Corporates were already having to flex, learning how to survive in this new environment, unsure how long this major disruption might last,” explained Tim Tyler, global senior industry principal at Finastra.
“We wanted to know, would corporates and their banks be beholden to the ‘now’ or did they paint a picture of a future that would happen anyway?”
The research showed that banks and their clients are still in the wait and see phase. Xuelin Chen, group treasury director at Trip.com, echoed Tyler’s view that so much of the banking model was in flux, telling the audience that it was true that technology was becoming more of a focus, mainly from the retail side, where the demand for ‘real-time’ products and services is being driven by fintechs.
“Customer demand for real time settlement is already driving things in that direction, and the fintechs have already delivered that in the retail sphere. Corporates are demanding the same, though we’ve yet to see the same progress in SME and commercial banking,” she said, explaining that Trip.com works with a number of different banks, with clear purpose to each relationship.
“I think those relationships have to work both ways: banks have a different revenue model and strategy – some look at the whole suite of services, making up revenue shortfall with profits in other areas; but other banks need to be profitable on each transaction. And I ask the banks about their model every time, to understand it better.”
So, what of the banks themselves? Are they really shifting from a relationship model to a more platform-based, technology-driven service model? Not quite yet, said Claudia Villasis-Wallraff, head of CCM treasury advisory APAC at Deutsche Bank.
“Relationship management is still the primary way that we access our clients,” she confirmed. “However, technology will play a huge role and will change the way we approach clients, and we’ll need to invest to keep up with our customers’ needs. That will allow us better access to clients.”
She explained that Open Banking, driven by widespread adoption of APIs, would soon be the norm within five years. “Global banks have already pushed this ahead and are profiting from it. And it will be interesting to see what the largest corporates will demand from their banks: this will change the game.”
Making that change a reality, the panel agreed, will require fintechs to work both in collaboration and competition with existing banking players. Doing so may herald a sea change in how banks deliver their services. “How long is it until corporate banking just becomes another service?” Tyler asked. “If you as a corporate want a letter of credit or you need to fund something, the banks will be able to say, ‘These are what your options are’.”
This, in turn, presents an existential question for banks: “What are you beyond the balance sheet?”
Tyler added: “In our research, we heard corporates tell us they were asking what banks are able to provide: and obviously the balance sheet is something that fintechs would struggle with, so I think so there’s very much a role for banks to play there, but I think Open Banking and the world of APIs over the next few years and what fintechs are doing to help enable that.”
Fortunately, there is a growing belief that technology can in fact spur on greater change. Indeed, Tyler believes that, rather than lagging behind the retail sector, corporate banking is rapidly becoming the front line of innovation.
“Historically, corporate banking had the image of older men in dusty rooms servicing client needs,” he said. “But now, that’s been transformed. The scope of what we can achieve with tech in corporate banking – building on Open Banking – is way beyond anything we’ve seen before. And that will be enabled by APIs to both service clients and join new ecosystems.”
Concluding the session, Tyler explained that the last few years had marked a fascinating time from a finance and technology perspective. “We’ve seen the demands that corporates are making of the banks, and the services that banks have reacted with – particularly in terms of some of that early digitalisation and access to get around the remote working challenges – but are they really best placed now to serve those cash and liquidity demands, particularly across the Asia region? I think we’re definitely moving in the right direction.”
