Banks have been pushing ahead with their digital transformation agenda for several years now. But the pace and scope of digitization across banking functions has remained uneven with some areas being modernized faster than others. Account analysis falls into the latter category. This function has been operating in the same manner for almost half a century. Today, the banking landscape is more challenging than ever before. Customers demand personalized engagement and on-demand access to their banking services. Outdated account analysis processes fail to deliver real-time balance information, cash forecasting, and error-free invoicing & statements to customers, leading to revenue leakage.
45% of banks admit that their account analysis function is frustrating for corporate users according to a survey by American Banker on behalf of SunTec Business Solutions. The survey covered 100 business banking professionals. The survey also revealed that while banks recognize the potential benefits of real-time data provisioning, banks have yet to fully comprehend and leverage the extensive range of services that a modernized account analysis function can offer. According to the survey, 36% of respondents say their modernization of account analysis lags other processes and more alarmingly, 46 percent don’t even feel their processes are outdated.
The Gaps in Understanding Customer Needs and Delivering Solutions
The survey shows that most banks today understand the importance of delivering the best possible service for their corporate customers. But they are unable to deliver the kind of experience their customers expect. The gap between what customers expect and what the bank can deliver is significant and spans critical aspects of corporate banking such as accurate invoicing, transparency, cash flow forecasting. 6 out of 10 banks say real-time account balance information is important for corporate customers, but only 41% of banks can fully meet client needs. 49% see error-free billing as an important essential service, but only 41% are equipped to deliver it. 49% say accurate cash flow forecasting is important but only 38% fully meet client needs. And 46% say transparency is important but only 32% can deliver it. The survey revealed that 97% of banks need to address market pressure to improve corporate banking services.
Corporate Banking is Transforming, But Account Analysis Lags Behind
This is not to say that banks are not making any effort to modernize and transform corporate banking services. More than 4 out of 10 banks are working on improving pricing on corporate banking services, seeking to offer customized service to preferred customers, enhancing account analysis on statements, increasing rates for corporate earnings credits or hard interest, incorporating Banking-as-a-Service (BaaS) solutions, or adopting near real-time account analysis to keep pace with their customers’ changing needs.
Unfortunately, many banks don’t fully understand how a modern account analysis system could benefit them. Most of them even think of it as a routine billing statement and don’t see the need to transform. They are used to legacy processes that are not adequately automated, error prone and very likely to cause revenue leakage. Currently, fees and charges are calculated and communicated to customers on a monthly or even annual basis leaving them with no option to get real-time insights into their account statements. As banks strive to differentiate themselves from competitors and protect their share of wallet from fintechs, continuing to work on legacy systems for this critical function may prove to be an expensive mistake.
Modern Account Analysis Practice Can Deliver a Win-Win Situation for Banks and Customers
A modernized, digitally powered account analysis function can be beneficial for both banks and customers. Real-time view into their accounts can help customers streamline their finances effectively and provide corporate treasurers with the data they need to optimize balance management and use of bank services. For banks, modernized account analysis functions can unlock the potential to provide third-party services, establish a distinct competitive edge, as well as address environmental, social, and governance (ESG) priorities. They can better manage the customer life cycle and plug revenue leakage. Banks can also explore the possibilities of new kinds of accounts like virtual accounts and hybrid accounts and better manage their customer engagement with real-time, on-demand experience.
Legacy account analysis systems may have worked at a time when customers had no choice but to accept the services their banks meted out. Circumstances have changed significantly now. Customers expect high speed, reliable, personalized, and on demand experience from their banks and are not afraid to switch loyalties if their needs are not met. Account analysis may seem like an insignificant function but can prove to be a powerful differentiator if modernized and implemented effectively. Banks simply cannot afford to ignore account analysis any longer.
Find out how a modernized account analysis system can help your bank. Download the whitepaper here.