Corporate customers are demanding more from their banks and these changes in their expectations are evolving rapidly. Our latest research into corporate customer banking needs highlighted that we are now seeing a shift in mid-to-large corporate expectations of their financial partners, primarily driven by their personal and corporate experiences as new innovative digital services permeate their lives. For example, in an increasingly digital world, reams of paper work, lengthy lending approval processes and wet signatures are now out-dated. While their personal lives seem to be increasingly digital with Facebook, Amazon and Smart TVs, with demand at a touch of a button, corporate customers arrive at work where people are still drafting and signing documents with parchment and ink!
Influenced by these personal experiences with almost real-time onboarding and rapidly available lending, corporate customers expect more from their bank – a shift that has only been further amplified and accelerated by the current COVID-19 pandemic. However, our research indicated that these expectations were often not met as the mid-to-large corporate banks have yet to experience the digital revolution we’ve seen in SME banking. Over recent years, the majority of investment and innovation in commercial banking has been focussed on the SME segment and based on our research, this latest wave of digital innovation has yet to hit corporate banking in full force. As corporate leaders and employees rapidly respond to new ways of working and heightened uncertainty, they continue to only more heavily rely on their banking partners for greater support and more flexible responses to their changing financial needs.
Traditionally, change has been considered difficult in this space as mid-to-large corporate customer needs have been viewed as highly complex – it conjures images of endless approvals and multiple handoffs, stacks of paper forms and weeks of processing times. However, given the availability of new data and analytics capabilities, do these processes necessarily need to be so cumbersome for clients? Or should onboarding a new colleague into the Finance team be considered as complicated a process as identifying a new lending security? To better understand how mid-to-large corporate banking can address customer needs more effectively, we need to shift our thinking away from these segments as being a daunting behemothian problem. Once we truly understand the nuances of corporate client needs, we can clearly identify areas for innovation in corporate banking.
Through our research, we wanted to understand what corporate clients truly valued in their banking relationships and whether these needs were being met in their current experiences. Specifically, we set out to answer the following key questions:
- Do corporates clients value a personalised, human-centric service?
- Are the current digital offerings of their banks meeting customer expectations?
- Are poor digital services and capabilities driving corporates to engage Relationship Managers (RMs) and Operations teams?
In order to build a complete picture of how the bank and business relationship worked, we conducted deep qualitative interviews with c. 40 employees from across retail, technology, manufacturing and hospitality industries and four different roles, split between mid- (between £25 – 500M turnover) and large sized (over £500M turnover) corporates.
Our research highlighted that:
- Mid-to-large corporate needs are rapidly changing, a shift which has been accelerated by the recent COVID-19 pandemic
- Corporate banks are not meeting customers’ evolving expectations, especially given the lack of innovation and digital self-service in the industry
- Limited digital capability is driving traffic into human channels for low value-add transactions tasks that corporates would otherwise have preferred to fulfil self-service
While corporate customers indicated that they have been less than satisfied with their banking experience over the past few years, we found that COVID-19 only further accelerated the rate of change in corporate banking needs and amplified their key pain-points. Before we continue to unpack corporate customer pain-points in our next instalment of this series, we wanted to first explore how COVID-19 has acted as a catalyst for change for many corporates.
How are businesses adapting in response to COVID-19?
The majority of organisations were looking to enhance their operational resilience as they redesign processes, technology and ways of working. Key strategic initiatives include rethinking digitising client interactions, technology upgrades and reimagining talent models. People are surprised at how they can operate remotely as effectively as they did whilst in the office. Many cultural suspicions around flexible working have been erased and the corporate physical space is now perceived as less important. With the rapid move to home working, financial services organisations have reported a positive sentiment from their workforce towards working from home and a desire to continue to do so when the pandemic is over.
As many businesses are now rethinking their ways of working and what the workplace means to their model, we found the following impacts on their banking expectations:
- As their ambitions evolve, businesses’ expectations of their banking partner are changing rapidly: where businesses are growing quickly, they expect their banks to recognise their potential and value as a customer and provide more tailored experiences.
- Corporate customers don’t always need an RM: customers were satisfied knowing that RMs were available and ready to help on complicated matters if customers were able to resolve simple queries through other channels
- Empathy in crisis management became a crucial factor: RMs were also expected to provide more value-add if they could empathise further with the position of the Financial Director (FD)
- Familiarity strengthens the relationship: Having a long-standing relationship with an RM also gives a sense of familiarity to FDs, allowing them to be more flexible and understanding should any issues arise
- Trust is at the forefront: a strong RM relationship can be an anchor point to build and strengthen the trust and confidence in the bank as a whole, though the basics must be in place
While COVID-19 has rapidly disrupted how businesses function, the upheaval also highlighted the complexity of mid-to-large corporate expectations of their banking partners. Our research unearthed the importance of digital self-service in everyday banking, as well as the value of human connection, empathy and trust in crisis management. Most importantly, the COVID-19 pandemic has highlighted key underlying pain-points that have plagued the industry, which we will further unpack in our next instalment of this series, helping us understand how corporates can leverage these opportunities to deliver a true digital experience and innovative service.