Networked digital business systems are table stakes for financial institutions and their large corporate clients. These integrated, linked solutions offer benefits such as improved efficiency and visibility within a single enterprise. Yet banks have never been able to use these systems to digitally connect with their commercial customers.
Now things are changing. As mentioned in my previous blog, corporate banking customers are beginning to ask for digital connections with their banks. Instead of manually processing and transferring payment files and managing payroll in an antiquated way, these companies want their banks to establish transparent, efficient digital highways that will streamline financial transactions.
Commercial customers are demanding solutions with the flexibility to connect their ERP systems directly to their banks. They want efficient, straight-through processing of transactions. And they also expect automated, efficient onboarding processes whenever they bring their business to a new bank.
Here’s the problem: The majority of today’s commercial banks lack the ability to support that type of inter-enterprise connectivity. That’s because their systems tend to lack transparency, have difficulty staying current with regulatory and compliance rules, and cannot support the requisite file transfer standards and security protocols. The result is lower efficiency and higher operational costs for customers.
Enabling faster, simpler, and more accurate processing
So how can banks step up to meet this customer-issued mandate – and demonstrate a level of responsiveness that will attract and retain customers and drive an extraordinary experience for those corporate clients?
One leading commercial bank met with us recently to discuss this challenge. Several clients had already asked about establishing corporate-to-bank connectivity by leveraging their existing ERP system, so the need was clear. In a design thinking session, we helped bank executives explore how they could use digital technology to better serve their corporate customers.
From this work, we identified four strategic priorities to help banks achieve best-in-class connectivity with their corporates.
- Open solutions that support integration: Financial institutions should search for networking solutions that offer flexible, agnostic connectivity with multiple banks in real time. When corporations can connect through an open network to their banks, they gain improved visibility and centralized transaction processing.
- Global format handling: Many large corporations have offices and assets located in multiple countries. To enable straight-through processing, they need a solution that supports a variety of messaging, file transfer, and security formats. The ability to address and adapt to changing regulatory and format changes is also essential to the success of these corporations.
- Simplified onboarding: Switching accounts to a new bank can be a nightmare for large enterprises. To streamline this effort, companies want automated onboarding processes that take advantage of digital connectivity. A business that has already entered its employee, supplier, and vendor information – including bank names, routing numbers, and account numbers – into its business or ERP systems should not need to re-enter all of this data just to change banks. Using digital connectivity, sharing that information should be simple and low-risk.
- Improved efficiency: Corporations expect banks to deliver a lower-cost methodology for executing transactions. Whether switching banks or adopting new payment structures, solutions must help companies execute changes quickly. They also want existing payment structures to be more efficient and accurate.
Solving customer problems for universal benefit
The good news is that advanced solutions are helping banks digitize connectivity with their corporate customers. By directly connecting enterprises with financial services institutions, these solutions offer companies a multibank, digital channel between their ERP systems and their banks. Leading technologies offer embedded connectivity to the SWIFT network, which includes more than 11,000 financial institutions worldwide.
The results can be significant. Using a cloud-based banking network, these networks can help improve the accounts payable and accounts receivable functions by automating all of the manual, error-prone steps involved with executing and reconciling payments, order-to-cash applications, and order entry documents.
Corporations can realize improved control, efficiency, and transparency of the financial accounting process. Automatic updates of payment status and cash positions in the ERP system can further streamline and improve treasury operations. And the banks that help corporations achieve these benefits will be rewarded with happy, loyal customers.
For more on digital transformation in the financial industry, see Fintech And Banking: A Lasting Relationship.