Good news for corporate and transaction banks: Corporates are turning away from non-banks

Despite the market hype that FinTechs and other non-banks are encroaching on the market share of banks, this is not the case within the corporate and transaction banking market. There has been an 83% drop in non-bank usage among corporates in the past year, according to our latest sponsored survey with GTNews.

Corporates are now demanding their banks to adopt non-bank services and leverage new technologies to bring them into the secure and regulated environment of mainstream banking. Usage of non-bank foreign exchange, know your customer, onboarding, payment and supply chain finance services has dropped from 71% last year to 12% this year. More than 50% of corporates are demanding that banks offer these services, as well as embrace new technologies.

Corporates also want advisory value-add services on regulations and security from their banks. Given well known breaches and fines, the move to open banking, and new regulations, corporates are looking to their banks to proactively work with them to protect the system as a whole and navigate the complex regulatory environment of global supply chains. In addition, as real-time payments are adopted globally, corporates also are seeking higher security services from banks, as well as value-add real-time payment services.

Corporate satisfaction remains a challenge

Despite the move away from non-banks, corporate satisfaction with traditional banks remains low. Our latest survey, however, identifies clear pathways to improve this and drive loyalty through technology, security and services.

As banks make a predicted 24% increase in new technology spend over the next 3 years to transition to client-centric business models, it is critical that investments in a fully technology-enabled business hit the mark. In particular, the adoption of industry standards, improved onboarding and new client-centric, multi-service portals are key, as well as offering value-add security services and driving non-bank service innovation. The survey shows that not all banks are on this pathway.

There are some concerning signs that small to medium size (SME) enterprises continue to be underserved. Satisfaction is very poor. More than half are reviewing their existing bank relationships, and multi-banking is on the increase. Similar to larger corporates, SME corporates desire advisory services and better working capital management services. And, they want to access these services through a single integrated point of entry, so multi-service and client-centric portals have become critical. In addition, their preference for the plethora of mobile apps pushed by banks is at an all-time low, with only 4% preferring to use them.

The survey results offer good news for banks that are at a critical stage in terms of their future investment and transformation. Opportunities for driving growth and revenue abound. CGI is working extensively with corporate and transaction banks worldwide to take advantage of those opportunities. If you’d like to learn more about our survey or our work in this area, feel free to reach out to me, or visit www.cgi.com.