European corporate banks are lagging behind their U.S. peers in terms of technology, a new report from Greenwich Associates found.
In a blog post this week, the data and analytics company released its new report called “European Corporate Banking: U.S. Banks Gain Advantage with Digital Solutions for KYC,” which found that European banks’ U.S. rivals have taken the lead in implementing key digital technologies, giving rise to intense competition in the corporate banking sphere.
Greenwich Associates analysts pointed to Know Your Customer (KYC) regulatory requirements as a key example of this trend. The burden of document requirements has led the financial services sector to demand digital, automated solutions to address the regulatory need, with U.S. banks at the forefront of implementing such solutions.
“KYC is taking an increasingly larger share of our time and resources at our treasury department,” said one respondent in Greenwich Associates’ 2018 European Large Corporate Cash Management Study, who also noted that corporate treasurers are turning to their financial service providers to alleviate the pain points of KYC compliance.
“It is time consuming and boring work,” said another treasury respondent about the challenge of KYC, “and we do not see it giving us any added value. Instead of pushing the work load over to us, much of the work should and could be done by the banks themselves, since much of the information required is publicly available information, like certificates of registration, with information related to who is authorized to sign for our company, and our many domestic and international subsidiaries.”
Over the last decade, researchers found, the role of technology in corporate banking competition has shifted from the race to roll out new digital products and services to digitizing the back office — to make operations more efficient, faster and more affordable both for banks and end customers. Researchers concluded a “large discrepancy in how multinational corporates rate the quality of their banks’ digital services in cash management and other banking functions,” with the majority of financial officers surveyed saying digital banking is a top priority when choosing a cash management provider.