Why Corporates select a Bank – the six key drivers
Banks do lots of research into why corporates select one particular bank over another. Corporates are still don’t switch banks as readily as retail bank customers, but their loyalty has also been steadily falling in the last decade. The drivers for changing their bank, however, are not the same as retail customers.
After decades of experience working in the corporate banking market, here are the six top reasons we believe driven corporate customers to select a bank.
#1 – Price: Before 2011 corporates choice of bank was primarily based on their ‘Reputation’ and ‘Ease of Transaction’. Now price is a key factor and corporates are shopping around for a bank that can provide the services they need at a fair and competitive cost. Price is now the biggest influence on the bank a corporate chooses.
#2 – Service: Corporates demand a high level of service in return for their business, so the decision on whether or not to change bank for additional products is primarily driven by how service focused the bank is perceived to be. If a bank is not providing a near-world class customer experience & service level it is likely to lose corporate customers.
#3 – Product: The ‘one size fits all’ approach no longer works for corporate banking. As well as truly omni-channel banking, corporates are looking for products suited to their industry that can be tailored to their particular business needs.
#4 – Reputation: The image of a bank is a key factor in the market’s confidence in its stability and, it follows, the security of a corporate’s cash. Even though strong regulation and better control by central banks gives customers greater confidence in the banking system, brand reputation is still significant in the choice of a bank. Some corporates will choose to align themselves with a ‘prestige’ or well known brand even though the bank may not offer the most competitive prices.
#5 – Industry and Business Knowledge: Until recent times, corporates were generally now too worried about their banks having specific industry knowledge for their sector. Increasingly, though, corporates are opting for a bank that understands their business better and can ‘speak their language’. This can be a major differentiator for a bank trying to attract new corporate customers.
#6 – Analytics: Corporates have always demanded basic reporting and descriptive analytics. Now, however, corporates are asking for advanced predictive and prescriptive analytics to give them the insight to make better strategic decisions for their business.
Corporate Banking remains an attractive market for banks but it will change significantly thanks to regulatory changes, ever-growing competition and the increasingly sophisticated demands of corporations. Banks need to change their approach from ‘Inside-Out’ to ‘Outside-In’ to attract new customers and retain their existing corporates. Taking an ‘Outside-in’ approach requires the bank to track customer preferences dynamically and understand better what would they want rather than what banks think they want. Those banks who are quick to exploit the benefits of new technology and keep innovating their products and services will be the market leaders in years to come. Understanding this challenge and adapting dynamically and intelligently will be critical in achieving future success.
Nucleus Software is a leading provider of transaction banking solutions. They are used by some of the largest global and regional banks in the world seeking to offer transaction banking services to their corporate clients. To find out more about our next-generation software product, FinnAxia, see here.
This post is based on an original article published in Treasury Insider: http://www.treasuryinsider.com/2015/05/12/top-six-reasons-that-influence-corporates-to-choose-a-bank/ by Nucleus Software.