Indian corporate banking industry re-imagining way it operates; BCG-SWIFT report shows way forward
Saurabh Tripathi, Senior Partner and Director at BCG and the co-author of the report, says, “Corporate banks will have to re-design their products and processes by putting the customer at centre of the design. Digitization in corporate banking industry has been largely ignored over the years whereas the customers now expect far more digital readiness from the banks."
Corporate banking across the globe is passing through a turbulent phase, and Indian corporate banking industry is no exception. Corporate lending margins are reducing, borrowing is shifting towards capital markets, corporate clients are demanding greater and better digital experiences, fintechs are turning formidable rivals by offering cutting-edge alternatives and frauds are becoming commonplace. And all of this has come together to force the Indian corporate banking industry to fundamentally re-imagine the way it operates, reveals a BCG-SWIFT Report.
Saurabh Tripathi, Senior Partner and Director at BCG and the co-author of the report, says, “Corporate banks will have to re-design their products and processes by putting the customer at centre of the design. Digitization in corporate banking industry has been largely ignored over the years whereas the customers now expect far more digital readiness from the banks."
Recent happenings that have had massive repercussions include growing corporate NPAs, bans on LOUs/ MOUs and increasing cyber and fraud risks, even as sophisticated digital customers are increasingly demanding better customized experiences at every point of the journey. Since corporate clients in India are not satisfied with the current offerings from their bankers urgent and immediate action by banks is called for. What form should that take? This BCG-SWIFT report lays down seven key themes which are very critical in India:
1. Offer industry specific solutions: Different sectors have very different product requirements – banks will need to shift from classical sales push to advisory models centered on client needs and experience
2. Reboot corporate RM model: Next-Gen RM model requires an overhaul in mindset towards advisory relationships and business deepening, and equipping RMs with technology.
3. Unlock full potential of pricing: Moving from a cost-plus to a market based pricing model can help banks improve realization significantly.
4. Digitize end-to-end corporate customer journeys: Digitization of customer journeys can result in massive reduction in turnaround times, coupled with cost reduction and improvement in operational risk
5. Fully exploit power of analytics: Leveraging analytics across the entire spectrum of wholesale banking use cases, including planning, sales, risk, pricing, servicing and loyalty management
6. Innovative ways of doing credit: Leveraging digital, analytics and automated tools for underwriting and early warning systems can result in faster decision making, quicker default detection and lower cost of monitoring.
7. Organization enablement against security breaches: Banks need to establish clear policies and processes, and focus on integrating security and compliance into how people think.
The execution of this agenda can deliver multi-fold value to banks – in the form of 30-40% increase in revenues and 15-20% reduction in costs, resulting in 0.5%-0.7% improvement in ROA, says report.
Tripathi added, "Similarly, the banking relationships and products have mostly been transactional whereas the customers expect banks to be trusted business partners who can offer them customized services. Banks will need to reorient their frontline relationship managers from deal based business to flow based business for deepening their business relationships. Next generation corporate banking will be industry specialized, digital and cost effective".
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On his part, Kiran Shetty, CEO of SWIFT India and Sub-regional Head of SWIFT APAC, said, “As institutions redefine their corporate banking value and enhance customer experience, we are excited to be the trusted provider for our community as our technology can accelerate digitization in the many facets they desire to achieve across their securities, trade, wholesale and retail business lines.”
