Who says elephants can’t dance?

There is this pandemic which has changed several equations. No doubt there is a need to be more and more digital to ensure resiliency. While this started long back in retail banking and is also now reaching the maturity stage, what comes as a surprise for me is the way the corporate banking is transitioning. This has started even before covid has set in. For instance1 there was a survey in 2019 which revealed 95% of the corporate and SME customers are expecting the bank to offer digital services on par with retail.

Who is the elephant here – is it the corporate or bank or both? I think both banks and the corporates are messy in corporate business space. I believe, sometime precovid itself, the elephants started going to gym to be nimbler, but now it’s the Covid which has become that catalyst making the huge parties to dance. 

Complexity in Corporate business:

• Trade: Needless to say, the corporate transactions are complex by its very nature. For instance the trade itself with exporter and importer in different countries and then they don’t trust each other’s banks and then there is another set of advisory banks apart from the already complex ecosystem of sender, receiver, sender bank, receiver bank, clearing bank etc. This space is even more complicated with shipping, the ports involved, the number of days to receive goods and on top of it is the insurance aspect and not to forget the claims part if something goes wrong.
• Cash forecasting: is not just daily cash inflow outflow any longer. It must even consider the upcoming receivables and payables, it also needs to consider those cheques which are under the process of collection or payment.
• Payments: Recent open payments like UPI etc. have seen such high unprecedented volumes. Then there are not just local payments but also international payment with and without adhering to ISO 20022 standards.
• Supply Chain Management: This has become a separate business, where there is supplier, buyer and even distributor financing, last but not the least Invoice management and Invoice financing

Post covid Corporates are finding it difficult, running around in different directions to meet increased demand for Digitization. They need a one place solution to make their business real time or at least near real time

What does this translate to in Corporate banking needs?

• Service: A faster and a reliant way for corporates to connect to the end customers, higher visibility or exposure of their inventory on market place, a different set of tools so that the end customer is able to access the business products, a set of engagement services which can help the corporate clients pick up on digital skills and use technology in daily activities (For ex: Cheque collections can be completely on Whatsapp instead of physical collection . Now all this needs to be virtual with covid setting in.
• Payments: The payments services also need to include ERP integrations, B2B Payments, Collections using Virtual accounts and Liquidity going both regional as well as global.
• Digital trade finance and supply chain finance requires easy onboarding and automated financing. This will need to cater to both small SMEs as well as big players.
• Working Capital management: Banks need to provide a single proprietary based workflow management & working capital financing, platform-based invoice upload, reconciliation as well as financing usecases.

Hence there is a need for a smart platform solution or even a digital suite offering from Banks – where corporates can get to manage Inventory through portal, can do bulk uploads, exchange documents as required, take real time approvals from relevant parties, do some tax Submission, accounting, inbuild ERP clubbed with Platform based financing and also invoice reconciliation. Last but not the least some amount of analytics to do the recievable and payable based cash forecasting

Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible. -Francis of Assisi

I have realized the corporate banking going digital fully on par with retail can become the innovation bed of the future. Some of the innovations that are easing out things both process wise and technology wise are already in place. For ex: most of the players are opening B2B apis (Either through the Omni channel, Multi-channel or directly from the existing Core solution). Similarly, at every stage starting from onboarding, self-servicing, forecasting, reconciliation as well as instant reporting are being currently digitized.

1)    Smart Onboarding – The requesting process, the company validation with the authorities, bank verification and sending welcome kit, is being digitized.

2)    Digital SME Self Servicing –provisioning the ecommerce portal, doing the daily tasks like easy expense management as well as instant invoicing and payments are happening empowering the corporate customers.

3)    Digitize Trade finance are now being built using Distributed ledger technology and the smart contracts are achieved with Blockchain networks. This helps in not only creating networks but also reducing costs, time, and fraud.

4)    Cloud based SCF – for buyer financing, supplier financing as well as distributor financing reducing the overall TCO as well as ensuring a faster time to market.

So, I believe the elephants are halfway there dancing to the digital tunes and are already on their way to reach their goal.

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