Drawing on results of recent Ernst and Young corporate banking, corporate treasury and commercial banking surveys, EY Managing Director Steven Lewis and EY Partner James Badenach focused in a session at Sibos on challenges and opportunities for corporates in their banking relationships.
While 63% of corporates say they are highly satisfied with their banking relationships, survey results also showed declining loyalty, an increase in switching, and frustration around onboarding. Even though complexity at a commercial level makes switching a challenge, 17% said they had switched their primary bank in the past twelve months.
A key insight for banks is that satisfaction is directly correlated with the number of products and services a customer uses. Other drivers of satisfaction for corporates include the advice that they get, innovative solutions for problems and having relationship managers who get things done. Core capabilities, how stable the bank is and the bank’s reputation also play a bigger role than price.
Banks are increasingly delivering more services through online and mobile, and weekly usage of these services is high. Satisfaction varies by region, however, with Japan and Australia in particular having lower satisfaction levels due at least in part to high expectations. The surveys showed that security, functionality and speed are essential for getting customers to use digital channels more.
Just over half of corporates said they use a non-bank, although companies in emerging APAC markets have a higher usage level of 71 percent. Start-ups, which talk about better service and customized products such as payments or peer-to-peer lending, are sparking customers to think about moving services to new providers.
EY said they segmented companies into internationals, traditionalists, and “diverse and dynamics” to identify opportunities for banks.
Internationals, the fastest growing segment, require a stronger relationship manager, new products, new coverage and a real partnership model. Banks can offer a senior relationship manager (RM) for key clients or a more junior RM to smaller clients.
The RM is most important for traditionalists, which want that personal relationship even when their relationship size does not justify it. Banks may need to look at how to shift traditionalists from relationship management to being more digital.
While Diverse and Dynamics have a variety of needs, one common theme is an eagerness to embrace technology.
The survey results offer clear insights, then, for how banks can serve customers better as well as how corporates can optimize their relationship with their banks.
While many still think the banking sector is characterised by legacy systems and lack of innovation, this could not be further from the truth. 2018 marks the year when a multitude of external factors will shake up the industry once and for all and reinvent the way people bank. Inevitably, this presents a threat, but also an opportunity.
There has been an uptick of treasurers inquiring about interest rate risk management in recent months as interest rates in the US and UK have started to show a rise in momentum, said Chatham Financial at the annual Bellin treasury conference.
The global economy has seen about eight years of growth, but we are starting to see the end of this which is triggering some volatility in global markets, Stefan Bielmeier, DZ Bank, argued in his keynote speech at the Bellin annual 1TC conference. Other speakers discussed blockchain, cyber crime and netting.
A series of governments are now very worried about the idea of bitcoin and these currencies because customers would be able to make sustainable ongoing transactions and payments without having to ever introduce the use of a typical financial model or banking system. To combat this potential threat, several countries including major central banks like the Bank of England and the Bank of Israel will be launching their own version of a cryptocurrency. This could bring big advantages to customers.