In the past few years a lot has been said about corporates becoming more demanding and asking for better service and value from their banks. However, this shift didn’t occur in isolation – much of it happened in parallel with the economic downturn that affected all of us. It turned us into more demanding customers looking for a better or different value in the products and services we buy. This year Pegasystems commissioned a survey that explored the challenges around creating that valuable customer experience in the corporate banking world. In this article I’d like to present and discuss some of the results (we received 61 survey responses from 38 banks, and 37 from corporates, from a total of 98 respondents).
It’s All About Service
It’s clear from our survey this year – and the one that we conducted last year – that corporate clients increasingly want and need a better service from their banks. According to our 2010 survey, more corporates are willing to redirect additional business to a corporate banking service provider who can give them the services that they want and need. This is supported by the responses to the first question that we asked corporates – would you consider switching to a different bank for better customer service around onboarding, account maintenance and query handling? – with 68% saying yes. Last year only 44% said yes to the same question.
At the same time, corporates seemed to have reached a point of frustration where they would be willing to pay more for the services they are either not getting or don’t think are good enough. When we asked corporates whether they would accept higher fees for the following services, 56.8% said they would pay higher fees for a sophisticated web portal that would allow them to manage their entire portfolio through the web (including reports, enquiries, service requests, user entitlement, payments, etc.) and 45.9% said they would pay higher fees for a consistent service across different regions, channels and lines of business (e.g. their relationship manager in London can help track a failed transaction in Singapore in minutes).
The Bank-corporate Relationship
While interest and fees have always been a factor in their choice of bank, quality of service seems to be increasing in importance for corporate customers. Our research provides substantial evidence for how this is affecting the relationship between clients and their bank. We asked corporates whether they had increased or decreased their business with one or more banks in the past 12 months and what the reason was.
The results here again showed a change in the status quo – 56% of the corporates have increased their business with one or more of their banks in the past 12 months by around 30%. The main reasons for that were: quick turnaround time for requests and enquiries and ease of access to service and information channels. Interest and fees were somewhere at the bottom of the list. More than a third – 35% – of the corporates said they have decreased their business with one or more of their banks by around 20%. The main reasons for this were: bad access to service and information channels and inconsistent customer service across channels, regions and lines of business. Again, interest and fees were at the bottom of the list. No corporate stated inadequate products and services as a reason for decreasing their business.
To address the demand for better customer service, bank IT departments will continue to spend more to improve and automate onboarding and service processes. In our 2009 survey, we asked banks if they were going to invest in automating their onboarding and client services processes in 2010 – only 20% said yes. This year, when we asked the same question, we found that actually 60% have already invested in 2010, an increase of 40% and another 84% intend to invest in 2011. And the top three areas of planned investment are onboarding process automation, end-to-end enquiry management and more sophisticated corporate portals.
Banks are going to quickly appreciate what corporate clients want and the pressure to automate more of their client service operations is going to intensify. However, banks are finding that they are limited by legacy systems, which are difficult and expensive to replace. It typically takes more than a year to undertake the necessary process and system re-engineering to enable better service in this area.
So what do banks need to solve some of these problems and present their clients with a consistent and easy to use customer service that will deserve higher fees from their corporate clients?
Creating an Intent-driven User Experience
Banks can manage business processes for users by letting the system drive interactions based on customer or user intent. This extricates front- and back-office staff from the manual workarounds they use to navigate current legacy environments. Banks can remove the inconsistency from their business processes with an intelligent system that analyses the intent of an interaction, selects an appropriate course of action and automates the processes – all without human intervention.
Business process management (BPM) technology allows banks to build more efficient business processes that take advantage of opportunities for straight-through processing (STP) and work automation. Banks can process work more efficiently by combining procedural process logic (receive, route, report) with declarative rules-based logic (research, resolve, respond) – minimising human intervention and automating work steps whenever possible. With BPM technology, banks rapidly develop, deploy and iterate optimised processes – building organisational agility on top of previously inflexible legacy assets.
Wrap and Renew
Outdated, inflexible legacy system assets can impede banks’ ability to respond to the needs of the marketplace and execute effectively on strategic objectives. Legacy systems often have a direct impact on banks’ ability to improve core operations, bring new products to market quickly or adapt to changes in its business environment. The business alternatives for banks trying to improve these systems have been few and far between. As a result, many banks continue to pursue high-cost, high-risk system replacement projects that often disappoint when the final business value analysis is performed.
BPM technology helps banks improve incrementally so they don’t have to settle for the status quo or pursue a big-bang projects. A ‘wrap and renew’ strategy allows banks to turn legacy investments into an advantage as they leverage existing assets to deliver new functionality and business value. This unique approach provides banks with a strategic alternative to costly, large-scale replacement projects.
Aligning IT with Business
When banks identify the need to change their business applications, they document their needs in terms of requirements. There is a host of problems related to requirements specifications that hamper agility, including:
- Requirements are slow to develop – They require business users to endure the arduous paper specification cycle that delays time to market and increases cost to deliver.
- Requirements are ‘thrown over the wall’ – Written documents are abruptly handed off between business and IT, where they can be misinterpreted.
- Requirements get stale – Because requirements documents are hard to create, and are released to the team in versions, they are often out-of-date.
- Requirements are hard to use – The requirements grow in size to the point where they become unwieldy, burdensome, and difficult to navigate.
Even though the above problems are well known, requirements documents are still used because businesses must rely on IT to do the development. The implementations often use complex technologies that require certain technical skills – such as Java development experience, and other programming skills. Therefore, business users describe what they need, and they rely on IT to provide the implementation.
BPM technology enables business users to collaborate with IT in the development of the system. BPM technology enables agility by making it easy to record, erase, revise, organise, and document customer service business policies and procedure changes, empowering the business to design for both planned and – importantly – unplanned business change in order to provide exceptional customer service.
BPM solutions don’t compete against innovative packaged solutions in the treasury marketplace. They complement them, bridge the gaps between them, make them work better for banks and optimise their value. They also enable change and evolution while reducing dependency on the packaged solution vendor’s release schedule.
As corporate customers demand better customer service, financial institutions need BPM solutions that empower their business with advanced technology. Consistent client service across lines of business, channels and regions is hard to achieve, but clients who adopt the most innovative BPM technology can create that experience for their clients. Being able to view and access their portfolio from anywhere is priceless for corporate clients these days and we’re not surprised they are willing to pay higher fees for it.
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