The Financial Services Specialists

The Bluerock Experience

As well as facing all the problems and pressures outlined on the Retail and Transactional Services pages of our web site the Corporate Banking arena has some specific challenges and we have categorised these into four critical areas.

Product innovation

The industry is increasingly moving towards a more 'enterprise payments' strategy, a horizontal view of customers across payment products and business strategy aligned towards maximising overall payments business rather than individual product line revenues (sometimes, at the cost of other product lines)

• Banks will increasingly focus on offering their customers multi-bank reporting and payments transaction services on a single online banking platform, developing alliances, interfaces and integrating processes with partner banks

• Corporates can expect to get more 'relationship based pricing' as against 'product' based pricing. Banks will want to track and monitor profitability from a relationship perspective, rather than at a product level, seeking to maximise profitability of the banks, and also utilise pricing based incentives to enhance customer stickiness - at a global level

• Faced with commoditisation of payments, banks will seek enhanced revenue opportunities through customised end-to-end payments solutions providing significant business value, such as procure to pay solutions to automate the procure to pay process, from invoice/purchase order reconciliation to payments initiation and automated posting to accounts payables and receivables systems

• Services such as 'least cost/optimal' routing will be the differentiators for banks offering the corporates fastest/most optimal combination of cost and speed of payment, based on intelligent rules on customer preferences and operational parameters such as clearing cut-off times, currency based holidays for cross-border payments, partner banks' payment cut-off times etc.

Customer experience

• Banks have evolved over the years with different front-office and back-office payment systems in different regions. As corporates expand relationships with banks globally, they will expect to receive consistent online banking and payments experience across regions, which would not be possible with disparate systems

• Banks will seek to consolidate numerous file transmission and online banking systems, currently siloed by payment methods and in certain cases, by different customer segments (mid-sized and larger corporates) to a single online banking solution for a more consistent experience, information and streamlined processes

• Many banks today take several weeks to on-board new customers - partly due to the limited flexibility and configurability to support the corporate's custom payment workflows, entitlement structures and interfaces (i.e. file/message) formats, and partly due to the numerous back-end systems on the banks' side that each new customer has to be set up on

• Banks will look to significant improvements in customer on-boarding processes with more self-administration, configurable workflow and entitlements set up, flexibility to support clients' custom payment file/message/report formats through easy configuration, rather than time-consuming system enhancements

Operational agility

Banks face the need for increased agility to deliver innovative services, remain compliant with changing regulatory requirements, and counter the impact of redundant cheque processing infrastructure and reducing per-unit costs. Banks will need to bring in operational efficiencies to re-engineer their payments processes and systems.

• STP in customer facing processes - payments transaction initiation, reporting and G/L posting to clients' accounts payables and receivables systems

• STP of payment transactions - support of intelligent routing of transactions to back-end payment processing systems, providing automated exception and reconciliation management and to seamlessly integrate payments processes with related compliance/risk and fraud management/billing processes

• Centralised payments operations and shared centre models for better economies and scale of operations

• Consolidation of common payments functionalities into a single technology platform

• Simplifying interfaces through a common messaging framework

Information management

Banks will need to consolidate transaction data from multiple back-end systems into a single logical view - both for banks and their clients. Information management initiatives will be focused around:

• End-to-end transaction status visibility, i.e. enabling a customer to track the status of each transaction across different stages of transaction life cycle, touching different front/mid-office or back-office payment system

• Aggregated transaction information analytics that gives the accurate picture of total payments volumes, values, liquidity positions, consolidated risk/pricing/cost and profitability view across subsidiaries

• Analytics that enable process improvement, recommendations and fraud prevention through transaction, funds and user behaviour pattern analysis

Specific problem for Britain's SMEs

• A massive £18.6 billion is the figure put on outstanding payments owed to Britain's small-to-medium sized enterprises - a leap of £2.6 billion in the last year, according to new research commissioned by BACS

• The research also showed that almost a fifth of SMEs (19%) now employ a dedicated person to chase in late payments - losing an average of 17 working days a year to this onerous task

• Figures also revealed some stark differences in the regions, with SMEs from Greater London faring far worse than their counterparts in other areas