CGI-sponsored GTNews survey reveals major challenge for corporate banks—declining client satisfaction (part 1)

Over the past four years, the satisfaction of corporate clients with their banking providers has declined steadily based on the latest findings of The Global Treasurer’s Transaction Banking Survey (GTNews survey), which CGI has sponsored for the last seven years. The 2019 survey reveals corporate clients’ satisfaction level has dropped to the lowest recorded level and is below 50% for the first time, with only 49% of corporate clients rating their bankers as good or excellent.

What is driving this decline in satisfaction, and how can banks turn it around? In this two-part blog series, I address these questions as banks begin to execute their strategies for 2020 (part 1), along with technology insights for achieving success (part 2).

Drivers for declining corporate client satisfaction

Two key reasons for the decline in corporate client satisfaction include the ever-changing requirements and expectations of large corporate clients due to their increasing globalization and move to 24/7 operations, together with their ever-decreasing timescales for processing transactions. The challenge for corporate banks is to keep up with these demands and develop new products and services to meet them.

This requires a fundamental shift in the way corporate banks deliver information. There is increasing pressure today for banks to provide full, 24/7 services, with much more real - time information. Instead of yesterday’s closing balance, the corporate treasurer needs real-time information across all accounts and in all currencies, along with information on the state of complex transactions, etc. This is the only way banks can truly support the corporate treasurer and finance director, whose time is so scarce nowadays that they no longer have the luxury to model their own numbers.

Another significant area of demand on the corporate banking client relationship is the constant stream of new regulations, particularly in the area of onboarding, where time delays add to the corporate client’s frustrations. These delays create the possibility of deferred or even lost revenue for the bank if onboarding takes months or the customer decides it no longer needs the offering.

Small and medium-size enterprises (SMEs) also have changing demands. As they begin to test and take advantage of services from FinTechs that are nimble and quick in delivering innovative solutions and services, they discover that the traditional banking relationship may not be so crucial after all.

The ability of FinTechs to deliver more quickly and innovatively can - and often does - make  corporate banks appear slow and old-fashioned. It is important to note that all corporate treasurers, in their personal lives, are customers of retail banks, most of which have already completed a major transformation of their businesses and now provide integrated FinTech offerings, along with an updated and improved customer experience. As a result, corporate treasurers rightly expect the same type of experience and services from their corporate banks that they enjoy from their retail banks.

What is interesting is that large corporate clients are not the only businesses developing alternative sourcing strategies; SMEs also are following this trend. Corporations of all sizes are seeking specialized services from specialized banks or other providers. This enables the corporation to achieve a balance between low-cost common services from its main banking partner and more innovative services from specialized providers to drive competitive advantage. As a result, corporate client expectations are increasing, and there seems to be a pent-up and growing demand for new digital, best-in-class products and services like those offered by FinTechs

When you dig deeper into the dissatisfaction of corporate banking clients, you can combine many of the issues into a single issue - access. Corporate clients are fed up with poor interfaces, multiple log-in screens, disparate services, and the inability to truly integrate core banking services into their treasury management systems. All of these access-related issues limit access to real-time information, making it more difficult for the corporate treasurer to make good financial decisions.

Responding to evolving corporate client demands

How corporate clients access bank services is changing, and two major trends emerged in the last year - the move toward single bank portals to access multiple services with a single sign-on (up from 19% in 2018 to 60% in 2019), as well as a significant growth in the use of SWIFT.

The importance of service access to corporate client satisfaction relates not only to how corporate clients access services, but also to the timeliness of access, especially with respect to the time it takes to engage with a relationship manager. Most corporate clients work independently the majority of the time. However, when you need access to a relationship manager, you really need it - right away. The results of the GTNews research indicates that, in many cases, timely access is still a major issue and this might be another area where corporate banks can follow the lead of retail banks by implementing digital solutions, such as intelligent automation, for common services.

It is interesting to note that, even though corporate client satisfaction is at an all-time low, corporate client still seem to be reticent to outsource services to third parties. Their rate of doing so is still very low, with non-bank foreign exchange the highest functional area outsourced at only 19%. This is good news for corporate banks. If corporate banks can replicate some of the open banking initiatives taking place in retail banking, corporate clients might be able to keep their core banking activities with a single service provider.

It is interesting that many corporate clients also increased their number of banking relationships in 2019, reversing the trend from previous years. The most common reason for this remains the extent of the banks’ geographic coverage. This is in comparison with the most cited reason for reviewing banking relationships overall, which remains cost.

Where exactly can corporate banks add value for their corporate clients, and, importantly, what role does technology play? We will explore these issues in the final part of this blog series. In the meantime, I invite you to download a free copy of the The Global Treasurer’s Transaction Banking Survey for 2019, and feel free to contact me with any questions.