As Europe and the U.K. continue efforts to boost competition in the financial services (FinServ) space, much of their attention has landed on small companies' ability to switch banking providers, should they choose to do so.
A new report from Cashfac and Ovum suggested small businesses (SMBs) aren't the only ones threatening to switch providers, however. According to their "Virtual Accounts: Closing the Service Gap in Corporate Banking" report released earlier this year, some corporate treasurers are considering ditching their providers in favor of a competitor.
Analysts described the scenario as a "red flag" for banks, with half of the corporate treasurers surveyed saying they have considered switching providers in the last year. Increasingly, treasurers want to streamline operations by consolidating their financial services under fewer providers, the report noted.
While the report signals a decline in the percentage of treasurers that are considering switching banks (last year, Ovum and Temenos found that as much as 80 percent of treasurers were thinking of ditching a provider), the analysis signals continued discontent among larger corporates.
"With the rise in snappy [FinTech firms] and an ever-evolving customer landscape, it has now become crucial for these organizations to adapt and evolve if they are to survive," said Cashfac in its announcement of the report, which also found that 40 percent of corporates said their biggest cash management hurdle is accuracy and granularity of cash forecasts.
Ovum isn't the first to warn of this trend, either. Last year, East & Partners released a report, "Financial Technology and the Corporate," that revealed 13 percent of corporate treasurers and CFOs had already entirely switched their banking provider. Their key motivation, the report found, was to access enhanced FinTech.
"Although FinTech innovation has been the domain of the retail and consumer market, corporate treasurers and CFOs within the largest companies from around the world are rapidly expecting the same levels of sophistication and innovation from business banking products and services," stated Martin Smith, East & Partners' head of markets and analysis, at the time.
With corporate treasurers continuing to consider switching banks, their desire to consolidate may be part of their overall demand for enhanced digital services. Consolidation of services may provide more streamlined visibility and management of their finances, both of which are characteristics of FinTech tools that treasurers want from their providers.
More recently, The Global Treasurer and CGI released a report on Monday (Nov. 12) that further highlighted a disconnect between banks and corporates.
Their Transaction Banking Survey 2018 found "a number of areas where corporates and banks have significantly different expectations of each other," The Global Treasurer said in its announcement. Continued declines in corporate satisfaction with their banks and current product offerings have treasurers flocking to treasury workstations. In turn, banks are growing increasingly interested in application program interfaces (APIs) in an effort to improve their corporate services, the report found.
Still, nearly one quarter of corporates surveyed by The Global Treasurer said they are now considering a non-bank provider for some of their key services. The finding could signal that banks waited too long to enhance their offerings for corporates, though the survey also found that banks are turning their attention to real-time services — including payments — in response to heightened customer expectations, as FinTech firms continue to lay on the competitive pressure. Artificial intelligence (AI) and cognitive technologies are also growing on banks' radars, the report said.
"Modernization involves improving agility by simplifying the IT environment, while automating and streamlining processes through the integration of new technologies," said The Global Treasurer. While banks are beginning to rise up to these expectations for their corporate clients, treasurers are at risk of leaving their bank in favor of FinTech firms or, in pursuit of streamlined processes, fewer financial service providers overall.