Digital Ecosystems Increase Opportunities For Corporate Bankers And Their Customers

Andy Hirst

As the digital economy matures, enterprises are increasingly doing business on various networks – everything from SAP Fieldglass solutions for contingent workers and SAP Ariba solutions for supply chain to Amazon, eBay, and Alibaba for goods. Thanks to these increasingly open digital networks, companies can acquire goods and services more efficiently and with less cost than they could using traditional procure-to-pay methods.

Until recently, procurement networks executed transactions while payments were completed offline through ERP system payments and the banking ecosystem. With the advent of open banking, however, financial institutions now see the opportunity to embrace these networks and integrate their financial and procurement processes.

The traditional focus of bankers on building relationships is still key in commercial banking, but client transactions are increasingly completed digitally. By integrating payments and supply chain financing into their business networks, banks have a new channel to market and can significantly increase their efficiency.

Barclaycard saw this opportunity to streamline the entire procure-to-pay experience. Instead of expecting its commercial clients to procure goods and services in one network and handle payments in a separate business system, the bank is taking steps to integrate Precisionpay, its business-to-business (B2B) payment product, into the Ariba Network. The result will be a unified procure-and-pay network enabled by open application programming interfaces (APIs).

David Price, managing director of client coverage for Barclays, sees tremendous value in the new network. “We’re incredibly excited about this partnership and the difference it can make for the buying community and the supplying community,” he said earlier this year at an industry conference. “Cards have an important place in B2B payments, but they are not right for every solution or supplier relationship.”

The unified network more-effectively balances the needs of buyers and suppliers. Barclaycard built extensive analytics into its network, allowing the bank to accommodate different accounts payable approaches and procurement strategies. The capabilities allow relationship managers to guide customers on the best way to maximize efficiencies and optimize supply chain strategies.

When banks use customer data (with customers’ permission) to provide integrated services, everybody wins. In exchange for sharing their transaction data with the bank, clients get better financing, suppliers get paid earlier, and the banks can better control credit risk.

Networked value

For financial services companies, the revenue uplift opportunities are significant. By gaining access to a previously untapped market channel, banks can do more business with both new and existing customers that meet their risk profile. As this opportunity matures, many more use cases will develop – everything from foreign exchange and receivables financing to insurance goods – and banks can sell these services over the digital network.

But the value is greater than just additional sales. The network ecosystems offer their clients access to a rich vein of proprietary transaction data. Granular details on the performance of the procure-to-delivery process are captured. Reports and analysis of this data offer much deeper insight into buying and selling patterns, customer payment history, and potential financial and credit risk for any given deal.

Building on this insight, banks can offer more proactive, intelligent, data-driven advice and guidance. Large financial services firms can combine transaction data with other financial, industry, and economic information. By analyzing this information, they can demonstrate relevant opportunities, execute the transactions electronically, reduce risk, and identify potential customer savings – helping commercial customers make better choices for their business.

Using digital networks to develop a comprehensive procure-and-pay network also can make banks more operationally efficient. Automation and digital technology can help organizations streamline their banking processes – reducing manual effort, increasing accuracy, improving relationship manager productivity, and lowering the overall cost of doing business.

The world is becoming strongly oriented toward digital networks. Banks must embrace these networks – or be left behind by their increasingly demanding clients. By partnering with digital networks, financial services institutions can better serve corporate clients and take advantage of innovative opportunities that will help them succeed in the networked economy.

To learn more about how Barclaycard is taking advantage of digital networks, watch the video.

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Andy Hirst

About Andy Hirst

Andy Hirst is vice president of Banking Solutions, SAP Banking Industry Business Unit, at SAP. He is responsible for driving the success of the SAP go-to-market strategy in Line of Business Cloud Applications and Analytics in Financial Services. Previously, Andy was responsible for Capital Markets solutions for banking. Andy is an expert in Big Data and analytics use cases in financial services and has been involved in many digital banking initiatives for banks.