Corporate banking is being transformed by digitization. From core business processes to the way that clients engage and transact, digital has become the sine qua non of almost every action. However, digitization is still in the early stages in corporate banking. As it matures, more fundamental changes will ensue, enabled by the free flow of data among banks, their clients, and third parties. The resulting “ecosystems” will catalyze new operating models and lead to disruption on an unprecedented scale.
Tech giants, for example, operate ecosystems with multiple businesses, some of which offer financial services, from trade finance to payments and marketplace lending. The implication of these new arrangements is that the traditional boundaries between corporate banks and the industries they serve can no longer be taken for granted. In an ecosystem context, information, resources, and expertise have coalesced; everything is up for grabs.
Banks in China are already getting involved, with a range of adoption models emerging, from fintech-based platforms to marketplace ecosystems and partnerships with large companies. European and US banks are also taking steps, with some investing heavily in fintechs and application programming interfaces (APIs).
The benefits of joining ecosystems include expansion into new geographies, markets, and products, added value from the sharing of intelligence and, in some cases, technology, and more effective risk mitigation—partly the result of enhanced access to data across the network.
Incumbents have a first-mover advantage, but to thrive in an ecosystem world, they must choose the role they want to play and develop the right strategies, talent, and IT to do so. They need to identify potential partners and determine which business models work best for them. The task is nuanced and complex, but it represents an opportunity that cannot be ignored.