How to bring real-time data and virtual accounts to corporate banking

In an incredibly fierce market, corporate banks that can’t meet emerging needs and leverage a broader ecosystem will lose market share. We’re already seeing it happen as specialized fintech players eat away at steady corporate revenues.  

There’s also never been a better time for banks to uplift their corporate offering. The enabling technology has matured significantly over the past few years. Today, we’ve proven it at the size and scale of the largest global banks. For example, bringing real-time data to your clients is much more accessible and cheaper.   

“The use of data, both by banks and corporates, is changing,” explains David Shinkins, Global Head of Cash Management Sales at Barclays Corporate Banking, in a recent interview with Burnmark. “Gone are the days when a bank will issue a vanilla bank statement. Corporates expect greater insights from the data they hold, both internally and externally.”  

It’s time to embrace fundamental transformation and become the innovative partner your clients need. The banks that succeed will look beyond the constraints of their current tech stack. Rather than modernizing legacy technology to meet new demands, banks need to look at the next generation of technology to deliver unique experiences for their clients.  

“Banks should not be trying to solve the problem of upgrading their core. They should be implementing the bank operating system of the future.” Antony Jenkins – CEO, 10x Banking 

The difference between digitization and transformation

Digitization

Digitization is the process of converting legacy processes and services to digital ones. It’s the route that sounds safe and easier. However, adding new layers to a legacy base won’t drive the outcomes you or your clients need. 

Transformation

Transformation goes much further. It involves rethinking entire products from the ground up, using digital native technology to deliver what your clients need today. We believe this is the route for corporate banks because it’s the only way to give your clients real-time data. And real-time data is integral to improving cash visibility and liquidity management, the biggest challenge for corporate treasurers, with 83% noting cash visibility as their biggest challenge in Redhat’s Corporate Cash Management Playbook. 

“As corporates strive for greater efficiency, they will look at automating the simple and repetitive tasks. The use of APIs will continue to grow in value, giving clients real-time connectivity and direct integration into their ERP/CRM. And when this is coupled with instant/real-time payments and data, you create the perfect storm for opportunity.” David Shinkins – Global Head of Cash Management Sales, Barclays Corporate Banking

Change starts at the core

1) Banks need real-time data   

Today, the source data available to banks is often limited to internal data, which limits the scope of what’s possible, especially for multi-banked corporates. At the same time, banks are speaking to clients about data analytics, but often, this doesn’t extend beyond manual spreadsheets.  

The account host sits at the center of your tech stack, where banking data gets generated. The only way to deliver next-generation experiences and products is with real-time data. The only way to provide real-time data is by rethinking your core banking platform. 

Banks can package up real-time data to offer powerful insights to corporates. For example, you can use payment data to enrich the company’s working capital efficiency analysis. Is the company paying suppliers too quickly? Are customers paying them too late? Banks can also use this insight to cross-sell trade and supply chain products.
 
2) Corporates need virtual accounts

“Virtual Accounts achieve significant cost savings and operational efficiencies, lowering bank account fees, self-service, and automation for opening and managing bank accounts. They enable a far more efficient reconciliation process that lifts out a lot of manual exception processing.” David Shinkins – Global Head of Cash Management Sales, Barclays Corporate Banking   

Traditional bank accounts are too rigid for the needs of your clients today. Virtual accounts enable activity under the central header account to be segregated by clients. Banking clients get better visibility for reconciliation and internal accounting as a result.   

Instead of adding virtual account technology on top of your core banking platform, we built it into the core because they are fundamental to day-to-day operations. Again, it goes back to the earlier point about transformation over digitization.   

You’re building on solid ground if you transform the core technology that powers accounts—bringing real-time data and virtual accounts through one solution. The first building blocks, and the beating heart of your transformation, are in place. Banks can then think about retooling the core and the peripheral elements involved in corporate banking processes, moving towards genuine change. 

For more on how banks could overhaul their core platforms to deliver true digital transformation, check out this summary of a recent webinar hosted by Finextra.