Asia/Pacific key corporate banking predictions for 2022 and beyond.
The dislocation caused by Covid-19 and the corresponding technology-driven shift has made seismic changes in an otherwise quite conservative corporate banking space in Asia Pacific region. The declining margins and increasing competition are further driving regional corporate banks to break new grounds to compete effectively with global banks at the vanguard of technology as well as fintech players. Against this backdrop, we can expect that corporate banks in the region will accelerate their modernization projects for systems and services with multiple initiatives like moving to cloud, advanced analytics, and aligning ESG priorities with their growth strategy.
“While regional corporations have been traditionally turning to the global banks for their corporate banking needs, large domestic banks are increasingly gaining ground in the corporate banking arena by deploying cutting-edge technologies and capabilities. Whether it be accelerated adoption of cloud or pivoting their ESG priorities, corporate banks in the region will delve further into technology to reinvent their strategy and deliver value to corporate clients.” Ganesh Vasudevan, Research Director, IDC Financial Insights.
Asia Pacific region dominates the global banking landscape, and with the regions’ GDP projected to grow at the rate of around 5 per cent, the corporate clients are looking at their banks for comprehensive, customized, and integrated solutions aligned to a digital economy. To succeed, corporate banks in the region can be expected to significantly increase their technology iteration as they evolve and innovate corporate banking offerings to get closer to their clients.
IDC Financial Insights’ Corporate Banking predictions provide guidance on how the banks in the region are seeking to enhance their competitive positioning by deploying advanced tools, technologies, and capabilities to strengthen their delivery structure and explore new business models to sustain growth and increase revenue. Here are the top 10 corporate banking predictions that will impact both technology buyers and suppliers in Asia/Pacific for 2022 and beyond:
Trade finance modernization – The massive change brought by current and upcoming SWIFT releases will force legacy replacement of trade finance systems, 75 per cent of which will be cloud based by 2026.
Cloud lending – By 2025, the use of shared industry cloud data will improve decisioning time on commercial loans by 40 per cent.
XaaS offering – By 2026, 50 per cent of corporate banks will offer treasury as a service to corporate customers.
AI in Payments – By 2026, 35 per cent of payments will be optimized using AI-derived routing models.
Fintech Enrichment of Bank Value Prop – By 2026, 40 per cent of accounting software providers targeting SMEs will seek a bank license to provide financing options and payment support directly to customers.
CBDC Impact on Cash Management – With CBDC rollouts gaining momentum, by 2025 more than 30 per cent of tier I corporate banks will offer their clients integrated solutions to unlock liquidity from both traditional and digital assets.
AML Investment for Social Good – As regulator and social pressures increase, 50 per cent of banks will implement AI-based AML models to better detect patterns of human trafficking and other illicit activity with high social impacts by 2025.
SME Cash Management – By 2024, 60 per cent of APEJ corporate banks will offer accounting and cash management tools targeted toward small businesses.
Sustainable Finance – By 2026, 70 per cent of APEJ corporate banks will reduce or be forced to reduce the carbon footprint of their lending activities by 40 per cent.
Connectivity Platforms – 40 per cent of corporate banks will platformise connectivity by 2023 to deal with the growing channel fragmentation. As an added benefit, this will be the basis for actionable, proactive alerts and data services.
