CGI has conducted an annual global transaction banking survey for the past eight years. In 2012, we began partnering with GTNews to produce and deliver the survey to the market. For many readers of GTNews, as well as CGI clients, this annual report on the state of the corporate-to-bank market has become a must read.
Over the years, we have seen some very interesting results, and the survey provides a valuable year-over-year history of these results. Other research in this market is often completed as a one-off event to support a specific campaign or launch of new solution; so the comprehensiveness and longevity of the CGI/GTNews research is unique, and the survey has become a benchmark relied on by both banks and corporates.
Corporate and bank perspectives
What also is unique about this research is that we seek the view of both corporates and banks. Doing so enables us to compare the two. It assesses how corporates feel about their main bank providers, how they evaluate their bankers, what criteria they consider in selecting a new banking partner, and even the types of new non-bank providers they’re pursuing (fintechs, for example). At the same time, we are able to assess the banker perspective, i.e., where banks are investing, how they see their relationships with their corporate clients, and, most importantly, which direction their strategy is taking them in the near future and where they believe they can deliver differentiation in the corporate market.
As we design the research each year, we start with the previous survey’s questions and then combine those with the top issues facing the market today. This helps us and readers to track key trends in the market over time, as well as identify major issues currently impacting corporates. For this year’s survey, the new issue we looked at closely was the introduction of the open API economy and the underlying PSD2 regulations in the European Union.
One might think that Payment Services Directive 2 (PSD2) is something that will be important to banks but not corporates. This Pan-European directive will take effect in January 2018. It currently and predominantly focuses on the retail banking market, including cards and retail bank accounts. The regulation, assuming the right security authorizations are in place, will open certain elements of data to third parties and fintech providers, so they can offer payment processing and other innovative services that use the transaction and account data.
The customer is intended to be the main beneficiary of PSD2. Banks that decide to lead and open up their services to more customers and third-parties, will find opportunities to entice unhappy customers away from their current providers and offer value add services While PSD2 is not yet focused on the bank-to-corporate market, many corporate banks are looking at the open API economy and seeing significant potential opportunities for growth.
This year’s survey findings, which were published on 26 September 2016, show a distinct and significant drop in corporate satisfaction in the bank-to-corporate relationship. Indeed, it is down more than ever before – 19% year-on-year. When you begin to examine the data more closely to determine why corporates are unhappy, and what banks can do to become a provider of choice, the connection to the open API economy becomes evident.
Corporates are now demanding much more from their bankers; they want integrated, high-quality digital services. As an example, for a number of years, we have seen a rise in the number of corporates that want to be able to access multiple banks from a single portal – but many banks have been very reticent to provide this.
Of special note in this year’s finding is that corporates have moved away from cost as the most important issue when selecting or reviewing their bank relationships (as has historically been the case). Other selection criteria now top the ratings: security, technology integration of services, digital services, etc.
Banks now have a short window to address the findings highlighted by this year’s survey findings. The results are clear that corporates are turning to non-bank providers for key products and are out shopping for the right banking partners.
The comparison of survey results between the bankers view and their corporate clients, for most years, show some areas of agreement and some areas of mismatch. In 2016, we have seen some of the biggest mismatches yet. We believe these mismatches are the underlying cause of corporate dissatisfaction, and they clearly demonstrate that, while some banks are responding to key corporate desires, a majority are not.
For CGI, undertaking this research ensures we understand the real issues impacting the markets we serve so that we can better help to innovate and assist our clients to deliver. In banking, it’s not only key to ask bankers what they think – you have to have the voice of their clients. This research enables CGI to get a detailed view of both the banker and corporate perspective to pinpoint innovation, lead with our clients and deliver value.
The conundrum now facing the market is whether the banks will be fast enough to respond and will non-bank providers show massive increases in penetration going forward? Only time will tell. However, this year’s results clearly demonstrate that there is more strain in the market than ever before. Corporate and transaction banking is on the cusp of radical transformation where digital capabilities in API’s, data-driven business models, customer experience and security become central competencies to leverage together with modernisation of legacy.
Europe’s opening banking regulation is finally here. After months of preparation across the continent, the Revised Payment Services Directive comes into effect on January 13.
The revised Payment Services Directive regulation, regarded as one of the most disruptive in Europe’s financial services sector, will begin to make an impact on January 13, 2018.
The cost of compliance efforts for banks has increased exponentially in recent years. This is especially true for those banks that are active in the global trade finance domain, where the overwhelming expectation is for compliance requirements to become even more complex, strict and challenging over time.
This year promises to further the regulatory compliance burden imposed on financial institutions. How are firms in the sector responding to the challenge?