Banking is a technology business at its very core. Other than the financial shocks and repercussions of the unprecedented COVID-19 pandemic, nothing has shaped the banking industry more in the past decade than developments in financial technology (fintech).

To learn more about commercial banking digitization and the shifting focus of banks, PaymentsJournal sat down with Sanat Rao, Chief Business Officer at Infosys Finacle and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Growth.

PaymentsJournalPaymentsJournalPaymentsJournaljQuery(document).ready(function ($){var settings_ap26147939 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"26147939",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_88974_2",settings_ap26147939); }catch(err){ console.warn("cannot init player", err); } });

Corporate banking technology is expanding

“Investors have reacted to advancements in fintech with open pockets, as indicated by the nearly $200 billion in venture capital funding in the fintech sector since 2014,” began Murphy. Though early investments were primarily targeted towards consumer solutions, they have since expanded to include a larger number of enterprise and corporate banking capabilities.

The chart below, provided by Mercator Advisory Group, presents a hierarchy of emerging technologies and categories that have been opening up on the enterprise level:

Artificial intelligence (AI), particularly machine learning (ML), is largely being used for operational enhancements such as credit granting and fraud control capabilities. Meanwhile, application program interfaces (APIs) have become a staple in the integration of new products and services. Similarly, cloud and blockchain adoption are noteworthy aspects of the ongoing digitalization as banks modernize every system across the cash cycle.

While the digital shift was occurring well before to COVID-19, the pandemic has heightened the urgency for banks of all sizes to make the digital shift and improve the customer experience. 

Customers are using the same products in new (digital) ways

“Technology has absolutely been at the forefront of all the changes we have seen and will see in upcoming years,” explained Rao. Even so, the business of banking has not changed on a fundamental level. Rather, products have become more commoditized; similar business products are being offered, but customers are using them in different ways. In Rao’s words, “the ‘what’ component has not changed, but the ‘how’ has.”

This is where digitization has had the biggest impact. For example, commercial banking capabilities like making a payment or collecting a receivable have long been available for corporate entities. But today, the same capability can be offered in a way that emphasizes a great user experience—something that hasn’t always been a focal area in the commercial banking space.