Corporate Banking Research Outlook 2020

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BANKING DURING AN EXOGENOUS SHOCK

COVID-19 has delivered a sudden and pervasive shock felt across every aspect of our personal and professional lives. In financial services, we used to say that there were very few changes that looked like hockey sticks; that observation is now out the window. The Coronavirus will accelerate trends that had been simmering, rapidly bringing them to a boil and demanding strategic responses in months, rather than the years firms used to have.

Celent is committed to helping our clients assess the technology implications across the financial system, from changes in customer behavior to new strategies and technologies required to respond to this upended world. We’re in touch with financial institutions and their technology partners around the world and are developing a host of new perspectives, updated regularly, to help you make the right strategic technology choices in the medium- and longer term. Our clients have access to our insights through traditional ways – reports, blogs, Analyst Access – and new media, like interactive virtual roundtables and snap polls.

Because Celent is part of a larger organization, Oliver Wyman and Marsh & McClennan Companies (MMC), you have access to our collective thought leadership in areas ranging from epidemiology (Oliver Wyman), to economic modelling (Oliver Wyman), to risk/ crisis management (Marsh), and human resource implications (Mercer).

For further information, please see:
Marsh https://www.marsh.com/us/insights/research/pandemic-risk-hub.html
Mercer https://www.mercer.com/our-thinking/managing-novel-coronavirus.html
Oliver Wyman https://www.oliverwyman.com/our-expertise/hubs/coronavirus.html
MMC https://www.mmc.com/pages/coronavirus.html

One thing is certain: none of us can go it alone. As you face hard decisions in the areas of technology and partnerships, Celent is here to support you. We can help you vet partners and technologies as you respond to government initiatives, the changing needs of your customers, and growing cost pressures.

RECAP: THREE EXTERNAL FORCES DRIVING CORPORATE BANKING CHANGE

At the start of 2020, corporate bankers faced a 2020 landscape shaped by three powerful external forces:

Corporate Banking External Forces

Corporate banking remains an attractive growth segment, with projected revenue growth of 3-4% over the next few years. Cash management and payments continue to offer especially attractive returns for those banks able to remain competitive. Competitiveness shouldn't be assumed, however, as the largest global banks engage in a technology arms race in an effort to grab an out-size share of revenue pools. New and improved client-facing propositions will dislodge large revenue pools from corporate banking incumbents that fail to innovate in the face of billions of dollars committed to technology innovation by Tier 1 banks.

Manual processes combined with limited treasury staff continue to be top operational challenges for treasury and financial professionals. Banks are well-positioned to help clients to transform corporate treasury, incrementally digitalizing and digitizing their operations, enabling step change with new liquidity management tools, and introducing new, game-changing technologies. Some banks have started down the road to Treasury 4.0, but non-bank tech providers are outpacing the banks, putting additional revenue at risk.

Incumbent banks continue to struggle with inflexible, expensive legacy systems combined with inefficient support processes across product silos. To drive profitability and release budget needed for growth initiatives, banks are looking for ways to generate efficiency gains while reducing pain points for customers. Client-facing processes such as customer onboarding and loan origination are obvious candidates, along with less obvious candidates such as traditionally siloed payment systems and operations.

These forces imply a set of specific technology priorities that banks should embrace. We’re going to focus our research efforts on helping bankers (from line of business executives to technologists, strategists to implementers) educate themselves about key technological questions, prioritize their spending, and execute their strategies.

2020 RESEARCH THEMES: UPDATED

Five areas continue to dominate our corporate banking research. As always, we'll respond to fast-moving developments in our research space, with analysts focusing on Treasury 4.0, new technologies driving differentiation, accelerating efficiency savings with digitalization and digitization, the pace of change in payments, and, of course, our flagship Model Bank Awards (to be published in April). We expect that Celent's Q2 Corporate Banking research agenda will be fluid as we adapt to fast-moving forces brought about by the Coronavirus pandemic. Where we see impact, our upcoming research reports will include commentary about the implications of COVID-19.

From Industry 4.0 to Treasury 4.0

Industry 4.0 is bringing the digital and physical worlds together, changing the way we work and interact. Treasury will borrow a page from Industry and leverage disruptive technologies to achieve real-time, highly automated treasury processes, with data-driven forward-looking decision making.

New Technology Driving Game-Changing Differentiation

In the tech arms race, banks are leveraging emerging technology to launch new value propositions for corporate clients: AI-powered cash forecasting, Blockchain-enabled trade finance consortia, and digital assets for correspondent banking settlement.

Leveraging Technology to get Efficient

Leading banks are using technology to transform their cost structure, lowering the costs to run legacy systems and redesigning processes to eliminate friction. Winners will be those that develop a substantial cost advantage while dominating the customer experience.

The Quickening Pace of Change in Payments

While payment volumes continue to grow exponentially, the rapidly changing payments ecosystem demands that technology keep up. New real-time payment schemes, the changing face of payment market infrastructure, migration to ISO 20022, and cloud-ready platforms are driving new entrants into the payments technology space.

Model Bank Awards

With nearly 140 nominations of exceptionally high quality, we have been developing case studies of the winners, culminating in the mid-April publication of roughly two dozen reports from around the globe.sessing them shortly and developing case studies of the winners, culminating in the mid-April publication of roughly two dozen reports from around the globe.

TYPES OF INSIGHTS

We will continue to deliver different types of insights, from analysis of technology trends shaping the banking industry to vendor analysis. Note that we’ll be publishing Briefing Notes (a new short format based on interesting updates we receive from industry players) throughout the year, but there’s no way to predict what those topics will be.

Industry Trends and Case Studies

  • Model Bank case studies from around the world
  • Corporate digital channels trends
  • Liquidity management
  • Cash forecasting
  • Blockchain and digital assets
  • Artificial intelligence
  • Payment trends and technology
  • Open Banking and APIs
  • Remote cash capture
  • IT spending
  • Various Briefing Notes

Vendor Analysis: ABCD, Spectrum, and Briefing Notes

  • Corporate digital channel solutions
  • Customer onboarding solutions
  • Payment services hubs

VendorMatch, Celent’s new vendor discovery tool, is playing an increasingly important role in our vendor analysis. See more at https://www.celent.com/vendormatch.

Contact us for more information about what we have planned in Q2.

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