In recent years, the pace at which mobile technology and its adoption has advanced far outstrips any other major market or technological development. The mobile is so ubiquitous that 77% of the world’s population (5.3 billion people) use some form of mobile device as part of their day-to-day lives.
This phenomenon has led to a rapid demand for mobile banking (m-banking) services, particularly in emerging economies where over 50% of consumers want to use mobile phones for greater access to financial services. Unsurprisingly, in a recent Aite Group survey of 319 treasury executives worldwide, approximately two-thirds of businesses would be at least ‘somewhat likely’ to perform basic transactions over corporate m-banking over the next 12 months1.
Furthermore, almost 85% of respondents to a recent KPMG International online survey of bank executives say that mobile payments (m-payments), as opposed to m-banking, will have significant importance to their business within the next one to four years. In the UK alone, the proportion of people using m-banking increased from 9.7% in 2010 to 20.7% in 2011.
The adoption of mobile in corporate banking is now catching up with the remarkable rates that we’ve observed in the retail sector. Consumer banks have been leading the way in providing mobile offerings for retail customers. Such consumer services are today innovating in terms of offering services through mobile. Corporate banks can learn from these retail initiatives and customise offerings tailored to the corporate segment. As demand continues to grow, banks will need to respond quickly to ensure they are offering functionally-rich services to ensure client retention and new acquisition rates.
A corporate user can benefit from access to a wide variety of financial services via the mobile channel, including:
- Gaining visibility over real-time financial information on a group-wide scale (including multiple accounts and cash positions – across banks, locations and time zones).
- Monitoring and acting on incoming and outgoing payments and checking the status of major financial transactions.
- Receiving real-time alerts and notifications.
- Initiating, approving and releasing transactions for salaries, foreign exchange (FX) trades or wires.
- Performing administrative functions, including access control and payment library maintenance.
- Having more timely and straightforward risk monitoring.
Corporates are now also using the mobile for a variety of innovative mobile payment applications. M-payments are particularly relevant where corporates have a number of small and medium-sized enterprise (SME) customers or distributors. Due to its flexibility, the mobile channel is very valuable for expediting payments, and in fact the entire financial supply chain (FSC) ranging from invoicing to settlement, through mobile-to-bank account payment services.
Banks also stand to gain a whole series of benefits through offering the above services to corporate clients via the mobile channel, including:
- Helping the bank position themselves as early adopters of innovation, rather than carrying a ‘me too’ type perception among the user community.
- Establishing brand recognition at the executive-level within corporate clients.
- Reducing dependency on branches, ATMs, kiosks and internet channel.
- Enhancing cash management revenues. In the recent Aite group survey cited earlier, approximately 50% of corporate executives were willing to pay for these services.
Enhanced Visibility and Stickiness with Corporate Clients
A strong business case exists for banks to provide these services to their treasury services customers. But in order to ensure the success of an m-banking service, banks need to understand how their mobile offerings would fit into the daily modus operandi of their clients in order to develop offerings that meet their customers’ needs. Consequently, m-banking should not simply be an add-on to a bank’s e-business strategy. Banks will need to plan carefully for what they expect to achieve via the mobile channel and how they can offer corporate clients mobile services that meet their short- and longer-term needs.
The services that banks are deploying to their corporate customers have a direct effect on the key financial decision-makers within those corporations. A mobile strategy focused on the provision of real-time, multi-bank balance reporting, ‘on-the-fly’ payment initiation and authorisation arguably delivers immediate value to those individuals. This is all the more reason to use it effectively to create brand recognition and cross sell products and services.
The banks most adept at delivering these financial services via mobile to chief financial officers (CFOs), group treasurers and financial controllers will be the ones most likely to secure a larger share of their corporate customers’ business.
The mobile channel presents a significant opportunity for banks to create a visible and direct channel with their corporate customers. It is important for banks to quickly take this initiative, and be seen as innovators.
Banks need to focus on their specific corporate market segments and tailor the mobile channel to their needs. Within these segments, mobile services have to be further fine-tuned based on the role of various users, as different individuals within a corporate will have specific work-related needs.
As banks begin to penetrate corporate financial supply chains with their mobile offerings, the impact on the corporates’ cash management cycles will be significant, greatly benefiting both the corporates and the bank.
1Source Aite Group report, referenced in Treasury & Risk, May 2011.
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?