As cash management banks focus on their digital capabilities, relationship management has fallen down the priority list, especially in Asia. Participants in a recent ACT webinar discussed this, and how some banks will have to ask themselves some basic existential questions.
Relationship management has moved down the priority list for banks and is projected to be the lowest priority by 2025, especially in Asia. In fact, it is already the lowest priority among Asian banks as they focus on their digital capabilities instead. This is the finding of a Finastra survey that was discussed at a recent Association of Corporate Treasurers (ACT) webinar on the next generation of cash management in Asia.
Tim Tyler, Senior Industry Principal – Corporate Banking (Global) at Finastra, presented the findings during the webinar. The treasurer on the panel, Xuelin Chen, Group Treasury Director at Trip.com, however, said that in her experience she hadn’t noticed this shift away from relationship management. Rather, she noted, banks have different strategies when it comes to making profits and selecting their customers. Meanwhile, Claudia Villasis-Wallraff, Head of CCM Treasury Advisory APAC, Deutsche Bank, said, “I believe that the role of the relationship manager will change – it won’t disappear, it will evolve.”
The Finastra survey states how the priorities of corporates in Asia are projected to be (in order of importance) real-time access and execution; online banking portals; value-add services; range of products and services; and lastly, account and relationship management.
When it comes to technology and digitalisation, however, it seems to have been more a focus for consumers and retail banking. Real-time settlement is already common for consumer wallets, but there is a gap between this and the corporate experience. Corporates are now demanding the same level of service, said Chen, but there has not been the same level of real-time capabilities for businesses.
Villasis-Wallraff commented that when real-time access is discussed with corporate clients, many haven’t actually thought about what they would do if they had it. For many corporates, “It doesn’t seem possible to do right now,” she said, adding that for many it doesn’t seem affordable because it would need a massive investment in technology. She also commented that open banking and APIs are likely to be the norm in two to five years, and this will transform what corporates will be demanding from their banks.
For now, however, noted Tyler, there is still a reliance on paper processes at banks. He gave one example: “Banks – particularly in the corporate world – are still heavily dependent on the fax machine. We talk about ERP connectivity, and we talk about joining everything up, but often banks want to see a ‘wet’ signature on fax,” he commented.
Tyler at Finastra noted the move toward “platformification” among cash management banks. And with open platforms, where all kinds of services can be offered by various providers through APIs, it is possible that corporates don’t realise yet what is available to them. The scope of what can be achieved with open banking is way beyond what regulatory regimes like PSD2 in Europe ever envisioned, Tyler said. This was consumer focused, but now corporate and commercial banking is moving to the frontline of innovation.
One possibility, for example, is that the corporate banking experience could be similar to consumer price comparison websites. A treasurer, for example, could enter their requirements for a letter of credit, and a solution could present all the options available to them, along with the pricing.
If there is a move away from relationship management towards banking being done on open platforms, what does this mean for the banks? What can financial institutions bring to the table if they are moving away from a focus on relationship management? Tyler said this is something of an existential question for many banks: what are they beyond the balance sheet? Or are they now technology companies?
