How to enhance real-time corporate banking solutions

In today’s 24/7 world, companies want to do more than just be able to transact in real time. They seek a seamless and dynamic online engagement with banks that provides them a live view of their liquidity positions, credit facilities and utilisation, and status on documentation related issues, without necessarily having to speak to their relationship and client service managers. In short, treasurers want the ease and efficiency typically associated with online shopping and access to digital tools available to retail banking clients, to facilitate their corporate and transaction banking requirements.

However, most real-time banking services are not as instantaneous or interactive as corporates want them to be. Historically, corporate banking has focused more on generating value by developing product-centric and client-centric solutions, and less on how clients interact with banks. There has been an overwhelming focus on nurturing client relationships exclusively through dedicated relationship managers, which in the context of real time interactivity can be cumbersome and detracts from the overall client experience. Furthermore, banks have been more circumspect in exploring more interactive solutions because of risk management practices, compliance with regulatory requirements and anti-fraud measures that necessitate elaborate identity verification procedures.

At the same time, banks face competition from nimbler fintech firms that are constantly churning out innovative solutions that are faster and cheaper. Keeping up with the speed of technological change can be an expensive gamble for banks, especially as they come under pressure from regulators who as part of various open banking initiatives, want to allow third parties to access customer account data in order to provide payments and other value-added services.

To bridge this real-time gap and turn emerging competitive threats into win-win opportunities, “banks must first understand what corporate clients want in order to create—in collaboration with fintech firms where necessary—innovative solutions that not only address key customer pain points, but also benefit the banks themselves,” says Krishna Sampath, Head of Liquidity Advisory, Asia Pacific, BNP Paribas.

What do corporate banking clients want? In our discussions with corporate clients, it is clear that there is not a one-size-fits-all approach that can address all their pain points. However, they were unequivocal in their expectations of banks providing them with one-stop digital solutions that can: Simplify and speed up time-consuming and duplicative processes such as Know Your Clients (KYC) documentation, on boarding, and tracking the opening of new, and closing of dormant accounts. Provide real-time access to vital information such as liquidity positions, FX and interest rates, utilisation of existing credit facilities, and statuses of service related issues. Enable real-time payments, settlements and liquidity solutions. Facilitate real-time collection and reconciliation of receivables and payments via e-wallets. Deliver seamless data transfers between banks and corporate Treasury Management Systems (TMS) and Enterprise Resource Planning (ERP) platforms.

Banks are in a unique positon to be able to aggregate these connections for corporates to synchronise settlement cycles; provide a single point of entry for multiple payment networks and conduct report aggregation and harmonisation among other value added services.

Banks are in a unique position to create innovative solutions in order to bridge the real-time gap and help corporates and banks optimise liquidity and save costs.

BNP Paribas has co-created tools to aggregate information from various e-wallets—such as those offered by Alibaba’s Alipay and Tencent’s WeChat Pay—into a single reporting format that can be fed into a corporate’s ERP system for reconciliation.

The tool is well suited to corporates who are working with multiple e-wallet players in Southeast Asia, China, India and other countries as it eliminates the need to customise the ERP for each e-wallet.

Active liquidity management saves costs and boosts efficiency

Access to real-time data gives corporate treasurers better visibility and control over their companies’ finances, enabling them to create accurate forecasts of their daily, 30 and 90 days liquidity requirements. By actively managing liquidity, treasurers stand to lower liquidity costs by deploying cash more efficiently thus improving interest yields and in some cases reducing the need to maintain, expensive overdraft limits.

Banks too stand to gain from having to provide corporates less intraday liquidity through overdrafts, for which they must maintain liquidity reserves. These reserves come at significant funding costs that can run into hundreds of millions of dollars annually for large banks. By enabling more real-time transactions and data access to corporates, banks stand to reduce the demand for intraday overdrafts, optimise their own liquidity, improve risk management and deploy scarce funds more productively.