B2B Payments

Corporate Banking On The Fritz?


This week, our Data Digest is all about corporate finance. Analysts may be releasing new research and surveys about the upcoming trends for 2016 this time of year. But as the numbers suggest, the future of business banking is far from clear-cut.

Automation appears to be killing banking jobs, with automated B2B services, like accounting and lending, playing a role. At the same time, SMEs are operating without third-party financial services, banks loans or, in some cases, without a bank altogether. Meanwhile, larger conglomerates seem to be taking financial matters into their own hands — and not in a good way. We break down the numbers that emerged onto the scene last week as businesses ready for 2016.


100,000: The number of jobs at several of the world’s largest banks reportedly lost to automation. That’s according to reports by Business Insider last week that described the job losses as the financial industry’s “Uber moment” — automated payments, accounting, lending and banking services, all online, are negating the need for manpower in financial institutions. And a major driver behind that push is corporate FinTech, which has exploded to allow small businesses to access working capital and automated financial services at the click of a few buttons. Reports said the job cuts that occurred in 2015 amount to about 10 percent of the total staff of the 11 largest banks across Europe and the U.S., including HSBC, Royal Bank of Scotland and Morgan Stanley, with other big name FIs expected to follow suit next year.

60: The percentage of legal marijuana businesses that are currently in operation in the U.S. without a bank account, new research revealed. A survey of 400 of these businesses revealed that the percentage jumps to 70 percent for the SMEs that actually handle the plant. The research offers a look at the financial struggles of these businesses, which have trouble finding a bank to provide financial services, as FIs fear legal consequences with marijuana remaining illegal under federal law. Reports note that it isn’t unusual for these businesses to handle all of their operations entirely in cash.

25: The percentage of businesses, give or take, that adjust their earnings figures. Specifically, according to reports in The Wall Street Journal and research from Deutsche Bank, about one-quarter of corporations are manipulating data like net income, sales or EBITDA — the statistic that accounts for earnings before taxes, interest, depreciation and amortization. Without those adjustments, analysts calculated that third quarter earnings this year actually fell by 13 percent for some of the largest U.S. conglomerates.

20: The percentage of businesses that aren’t using data analytics services to detect and prevent fraud at their organizations. Research from Deloitte found that one-fifth of the companies that responded to an online survey aren’t using these technologies to protect their businesses, yet about one-quarter of those surveyed said they expect fraud to increase in 2016; nearly one-third said detecting it will become more difficult next year, too.

15: The (surprisingly low) percentage of SMEs surveyed from alt-lender BlueVine that said they use bank loans. The rest of the small business owners reportedly finance their own businesses — 83 percent, to be exact. It may be due to the hassle of it all. According to BlueVine, of the 34 percent of SMEs that had applied for a business loan, 40 percent of them said it was a negative experience for them. The analysis included a slew of other stats, too. For instance, more than half of SME owners still manage finances on their own. Further, 28 percent of businesses said third-party solutions, like those for HR and payroll, were the most surprising expenses for their business — just behind taxes.

All of these figures aren’t painting a pretty picture for the corporate finance and business banking world. There are job losses galore, and conglomerates are manipulating their financial data. Meanwhile, SMEs are handling the numbers without the help of professionals. Yet somehow, small businesses remain optimistic about next year — according to our final statistic.

85: The percentage of SMEs in the U.S. that expect their revenue to see 26 percent growth next year, according to recent analysis from Yelp. Young companies are especially optimistic about the new year, the research said. Let’s hope their optimism holds out.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.