Hand holding phone, banking app icon on screen
Blockchain Challenger Banks Editor's Choice Europe

Apex Group: Are Challenger Banks Forgetting Corporate Customers?

Digital banking has taken over the world by storm due to COVID-19. With branches being closed, more and more high street banks were forced to adopt an up-to-date digital form of banking to keep up with challenger banks. Many challengers were able to capitalise on the pandemic’s effects as a solely digital banking experience seemed ideal for many who were trapped in their homes. Corporate institutions did not see the wave of digitisation as a solution though. They have not been tended to like the public and SME’s, leaving a great opportunity for someone to capitalise.

This has caused there to be a gap and opportunity for either challengers or high street banks to capitalise on an unhappy sector.  Apex Group, the global financial services provider, recently appointed three new executives to add to the core of the company. These included Alistair Stuart, former COO of Investec Bank, and Ankit Shah, formerly Head of Investments and Treasury at QIC Global (part of Qatar Insurance Company). Stuart is now the Managing Director of Digital Banking, and Shah is the Head of Digital Banking Business Development. Both have a wealth of experience in the financial industry and have picked up on the neglect corporate customers, particularly in financial services, are receiving from digital banking upstarts.

Here, they give their views:

Alistair Stuart, Managing Director, Digital Banking at Apex Group
Alistair Stuart, Managing Director, Digital Banking at Apex Group

Digital banking is now ubiquitous among individuals. So why can’t asset managers and other financial services benefit from the same convenience, accessibility and flexibility it provides?

For years, consumers have expected to have the option to make payments, open accounts, transfer cash and even apply for loans on their smartphones. Pandemic lockdowns further cemented the shift as branch closures, virtual signatures and other social distancing measures normalised digital retail banking.

Challenger banks in particular have seized the opportunities brought about by the new normal, deploying new technologies and marketing themselves as fresh-thinking upstarts competing against traditional banking institutions that depend on outdated legacy systems and approaches.

But the financial services sector has lagged in reaping the benefits of digital banking. Complex onboarding as well as know your customer (KYC), anti-money laundering (AML) rules and other regulations make their businesses harder to manage. Instead of brightly coloured bank cards, and accounts opened in minutes, companies are still going through painful manual processes accounts taking months to open.

Ankit Shah, Head of Digital Banking Business Development at Apex Group
Ankit Shah, Head of Digital Banking Business Development at Apex Group

Financial firms are consumers, too, however. They deserve the innovation and collaboration that consumers can achieve in their digital banking experiences. The pandemic changed their relationship to technology as permanently as it did for individuals.

This is the upshot: challenger banks are overlooking a market waiting to be served – and the payoffs that come with it. Financial services firms have been crying out for a truly digital bank to solve this chronic pain point.

Businesses are tough customers

Digital banking services for asset managers and other financial services are woefully inadequate in part because they can be tough customers to serve.

Finance is highly regulated. Funds and investors have serious concerns about security, compliance and data privacy, including data storage and protection. They operate in multiple jurisdictions and complex regulatory environments. Even for traditional banks operating in the asset management space, digital banking for financial services is often unviable. That’s why there aren’t any challenger bank apps, like Revolut, for investment firms. But financial services companies know that online banking platforms can offer a broad range of useful tools, like digital records, which eliminate the need for physical documents and help improve resource footprints from an environmental, social and governance, or ESG, standpoint.

Most want, as part of the onboarding process, the digital signing technology that has replaced ‘wet signatures,’ which have played a key role in business continuity during the pandemic lockdowns.  They also know that technological advances – for example, facial recognition, automation and digital checks – can ease security concerns, making it easier to securely share and authenticate information.

Most of all, financial service firms understand that a true digital banking platform can offer greater efficiency, reducing the costs and time involved in traditional banking and enabling the remote work and other virtual tools that the post-covid-19 world is already demanding.

Opportunities in the gap

Traditional banks are now struggling to develop digital banking options for corporations that are fit for purpose. Challenger banks, meanwhile, are fighting for consumers and turning their attention to small and medium-sized enterprises. So there remains a gap in the market – and where there is a gap, there is opportunity.

Since the pace of technological innovation continues to increase, banking for both individuals and businesses is likely to become even more sophisticated in the future. Harnessing these coming innovations for asset managers and others could be a path to phenomenal success.

For example, blockchain and distributed ledger technology will offer limitless opportunities – from financial transactions to automated contractual agreements – particularly as it removes the need for authentication. Meanwhile, advances in artificial intelligence (AI) will be able to help defend against cyber-attacks. Innovations in cloud-based software will likely push more non-core functions to the cloud.

All this new technology will require appropriate oversight and regulation with development of existing regulatory regimes. It will also require a vision to serve corporate customers with services and products that are just as innovative, accessible and flexible as those now serving retail consumers. Corporate banking ecosystems will emerge and evolve over the next few years providing a flexible service proposition with hyper-personalised offerings and customisable connectivity across Treasury and ERP solutions to name but a few.

The pandemic showed how legacy banks with a little help from financial technology were able to meet the moment, delivering new digital solutions to meet customer needs. As we emerge from the pandemic and internalise the changes it has wrought, banks shouldn’t forget the corporate customers waiting impatiently for their turn.

Author

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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