Working in banking for many years, I’ve seen quite a few state-of-the-art processes and technologies become outdated and then obsolete. Everything from adding machines to paper ledgers once had their day.
Business always changes and evolves. But banks that cannot keep pace with client expectations inevitably fall behind – and often fail.
That’s a real concern I have for today’s commercial banks. Their clients – the treasury professionals and others who keep the corporate finances in order – want more than they are getting from their financial institutions.
These corporations are accustomed to having enterprise data at their fingertips. With their ERP systems, they can instantly access information and get insight into operations. And they can access data entered by one function, such as procurement, to execute related tasks, such as accounts payable.
Corporations enjoy having a streamlined, seamless, and intuitive experience when it comes to accessing enterprise data. Now they want the same thing from their banks.
Today, integration between corporate banking systems and ERP solutions is very limited. Most companies execute daily file transfers from bank systems to corporate systems, a time-consuming exercise resulting in information that is outdated most of the time. Some firms rely on manual data updates, using information from bank statements to update their corporate systems. Not only is this a big effort, but the opportunity for errors is vast.
When I talk to corporate clients, many of them are beginning to wonder why it has to be this way.
The vision for bank-to-ERP connectivity
The answer is that it doesn’t. With the right technology foundation, corporate banks should be able to connect with their corporate clients in one seamless financial supply chain. Banks could make incoming payment data visible on corporations’ ERP systems as soon as funds are registered by the bank – just like a consumer can see a PayPal payment the moment it’s deposited in the account.
What’s more, banks could use this blend of technologies to move beyond simple transaction-based services. By combining bank data with corporate data, industry information, Internet of Things (IoT) data, and social media sentiment, banks can begin delivering value-added services that differentiate them from the competition. These services could range from powerful analysis of trends and predictive modeling to deep data intelligence.
Imagine if a bank offered a service that helps corporate treasurers evaluate the likely impact of currency or interest-rate changes on their business decision-making – instantly, based on real-time data. By assessing the impact of the market change on the client’s business scenario and factoring in the company’s risk tolerance, the bank could determine the best action in any given situation. Of course, such services would require the use of modern technologies, such as artificial intelligence, machine learning, real-time analytics, and deep predictive technology.
The potential outcomes of these value-added services could deliver real value for corporate clients. Global information visibility and access to cash along with improved liquidity would be likely outcomes. Corporations could more effectively manage risk, increase their operational efficiencies, and enhance their cost-effectiveness. And greater insight could result in better governance, control, and compliance – all at lower costs.
Choices every commercial bank must make
To make this vision a reality, banks must collaborate with enterprise software companies. Some of our commercial banking clients are beginning to explore the need for connectivity and the best ways to provide a streamlined, seamless, and intuitive experience for corporate clients.
As they delve into the technology, business processes, and best practices, these banks are getting a head start on the future. I guarantee they will be ahead of their competitors when it comes to delivering the banking services that corporate clients want and need in the near future.
What about your bank: Will you cling to today’s green eyeshade-style technology or will you prepare for the future of connectivity?
To learn more about our vision for corporate banking, attend my Sibos session on Monday, September 23, where we’ll discuss next steps and hear from executives at Lloyds Bank & Standard Chartered.