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The next generation of corporate banking
Banking leaders face an urgent need to radically optimize performance and commit to a continuous digital transformation.
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A building of the Development Bank of Singapore (DBS) (Courtesy of/DBS.com)
T
he corporate banking sector is in the throes of profound disruption — and it’s happening whether or not banks are fully ready. Banking leaders face an urgent need to radically optimize performance and commit to a continuous digital transformation.
In other words, there is an impending need for the incumbent banks to embrace deep, systemic digitization to stay relevant, open up new paths to sustained economic profit generation, and overhaul all key levers.
Now is the time for corporate banks to evolve, to reinvent themselves, and to innovate for both survival and growth.
According to the Corporate Banking Performance Benchmarking survey, by Boston Consulting Group (BCG), leading corporate banking divisions excel in four ways – they’re dramatically less credit-centric; deliver higher risk-adjusted lending margins; excel in managing operating costs; and have highly capable sales forces.
However, the players are facing increasing competition, declining interest margins and revenues, surging regulatory costs, spiking loan losses, and rising capital requirements.
These, amid an environment where digitally enabled business models are redefining the movement of data and money, are challenging banks’ traditional advantages and the economics of corporate banking. BCG’s benchmark data also confirms the hazards of clinging to traditional credit- centric revenue models and static, inflexible operating practices.
We don’t know precisely what corporate banking will look like in 20 years, but we’re getting clear indications of where the industry is heading. These indications come from every region of the world and all kinds of players, including aggressive incumbents, fintechs and fast-growing Asian banks that are in many ways leapfrogging brand-name Western corporate banks.
