Non-banks threat to EMEA transaction banking - Finastra
(4 July 2019 - EMEA) Transaction banking is severely under threat from non-bank new entrants in Europe, the Middle East and Africa (EMEA) according to a Finastra survey of 380 corporate treasurers for the report Digital Disruption Comes to the Corporate Treasury.
Product lines most at risk of increasing competition include core transaction banking functions such as payments (71 percent), liquidity pooling (67 percent), foreign exchange (67 percent) and trade and supply chain networks (56 percent). Banks are recommended to ratchet up investment in innovation if they plan to retain corporate treasurers’ cash management and payment processing business. Seven out of ten corporates (70 percent) believe that a shift from bank to non-bank services will take place within their organisations by 2024 and even as soon as 2021. Finastra’s research also confirms strong demand for open banking functionality among CFOs, with 29 percent citing it as a key opportunity for their business. Finastra is a major fintech formed by the merger of Misys and D+H in 2017.
Moves into transactional banking are already well advanced. Three out of four respondents stated that their business has already integrated with trade networks to link supply chain financing with payments. More widely, just one in four confirmed that they now exclusively use their bank to facilitate payments, with others choosing alternatives such as SWIFT gpi (46 percent) and other cross-border payments services (43 percent). Finastra states that banks have an opportunity to defend their incumbency on the proviso that they fully embrace new real-time payments channels, machine learning tools and Open Banking application programming interfaces (APIs) to meet changing customer requirements for streamlined instant payment reporting, insightful liquidity management and risk management services.
“Demand for convenient, real-time, digitally-enabled services has finally come to the corporate treasury. Treasurers are seeing first-hand the benefits of powerful technology platforms that use open APIs to connect cutting-edge services and are open to collaborating with third parties to benefit from these technologies. Banks need to act fast to strengthen their relationships with customers and offer the innovative services they demand” quoted Finastra Payments Head, Anders Olofsson.
Research based insights were provided by Accenture and Microsoft. “As we move into a new era of open standards, APIs, and interconnected business models the cloud will underpin new business ecosystems that will enable corporate treasuries to thrive and their businesses to grow. Those that fail to participate in these ecosystems might stay behind and face risk of disruption” stated Microsoft EMEA Regional Financial Services Industry Leader, Patrice Amann.
“Businesses are increasingly looking to their banks to become more connected in the digital economy, so they can better manage their businesses with faster real-time payments and open banking” said Accenture Global Payments Lead, Gareth Wilson.