Corporate banking operations trends to look out for in 2022

Throughout the past two years, the chances are your workflow has changed drastically. Your business’s ambitions have been significantly more conservative, your finance and treasury teams have been geographically scattered, and your understanding of the financial landscape has been muddied and confused.

Thankfully, 2022 is likely to resemble somewhat of a return to normality.

As the world of business opens back up – at least to some degree – financial leaders are scrambling to ascertain the future of their corporate banking operations. Not only this, but regardless of external circumstances, there are several key industry changes that have either already arrived or are on the horizon.

Open Banking

Open Banking is a term that has long been floating around the world of finance. If you’ve managed to evade its influence so far, now might be the time to become acquainted – especially if you’re in charge of corporate banking operations.

Put simply, Open Banking refers to a series of reforms that provide third-party financial services – such as smaller banks and disruptive FinTechs – access to consumer financial data through the use of APIs.

Through the availability of your data, challenger institutions will be able to save you money by contrasting your existing transaction history and spending with more viable and economical alternatives. In fact, transactions could even be made on your behalf.

This also forces banks to modernise and promote greater transparency, given that consumers and businesses may well end up having more clarity and control over their finances than ever.

Its impact upon corporate banking is perhaps most obvious, with numerous AISPs and PISPs already specialising in streamlining operational workflows and permitting greater cash visibility using Open Banking APIs.

To clarify, you must give consent to opt into Open Banking. Banks can’t simply access your financial data as and when it pleases them – each new provider must request permission to access your information, which you can then withdraw at any given time.

All signs point towards Open Banking being a mainstay in the future of corporate banking operations, with the benefits extending from allowing you to better track your business’s performance to simplifying accounting, payroll, and auditing.

Bank connectivity

Corporates are looking beyond connections to traditional payment schemes and shared payment networks to establish more direct integration capabilities with their banking estates.

There are two methods that increasingly find themselves firmly on many companies’ radars: financial APIs and Host-to-Host (H2H) connections.

Financial APIs, put simply, are pieces of software that allow for immediate consumer access to financial information – such as transactions and payments – through interacting with existing financial applications.

If real-time treasury is a large focus for your business, then you’ll greatly benefit from the real-time balance information and payments APIs permit, allowing you to make smart investment decisions in a timelier manner.

APIs are a notable talking point, then – but that doesn’t mean they’re going to be perfect for every situation. Not only will they require considerable standardisation, but it comes down to what’s best for your business.

H2H connections have been around a lot longer than APIs, but are increasingly being seen by corporates as an effective form of bank connectivity. H2H integration is simply an automated solution for high volume data transfer between banks and corporate clients and is an appetising option for businesses who deal primarily with high volumes of transactions via specific banks, as it’s typically both simpler and cheaper.

The downside, however, is that given H2H deals with a specific bank of your choosing, there entails a degree of bank lock-in, somewhat reducing the flexibility of this option in comparison with APIs.

Whatever your choice, the point is just that: there is choice when it comes to connectivity.

ISO 20022

With an ever-growing landscape of FinTech start-ups and challenger banks, it’s more important than ever to make use of a common standard.

First adopted by SEPA, the messaging standard ISO 20022 is now being adopted by SWIFT and will soon be adopted by the UK during the move towards Pay.UK’s New Payments Architecture.

From 2021 to November 2025, there will be a co-existence phase enacted by SWIFT, where ISO XML and legacy MT standards will both be in operation.

Adoption comes with its challenges, but its arrival is imminent. In fact, ISO 20022 is expected to account for 80 percent of the value of high-value transactions by 2023.

Pay.UK have also announced adoption of ISO 20022 as part of their New Payments Architecture initiative.

From a regulatory perspective, the payment systems regulator’s specific directions for Pay.UK’s introduction of the New Payments Architecture includes, as a key principle and requirement, the adoption of ISO 20022 as the payment messaging standard.

In addition, the Bank of England is undergoing a program for the renewal of its Real Time Gross Settlement (RTGS) system. As a part of this infrastructure renewal process the Bank has taken the decision to adopt ISO 20022, which it considers vital to ensuring data interoperability across the UK’s main interbank payment systems and compatibility with the emerging international consensus.

Accessing automation

As a trend, automation is something of a catch-all, addressing some of the issues posed by the pandemic and more broadly offering your finance and treasury teams a pain-free, streamlined 2022.

In corporate banking operations, automation, as aforementioned, refers to the removal of manual processes that plague your team.

Take payments, for example. Finance and treasury teams spend hours every week sending payments through a number of different providers and host-to-host banking connections such as Bacs, SWIFT, SEPA and Faster Payments.

The sheer quantity of different banking portals and manual data processing required consumes needless hours of your team’s routine, when they could be spending their time and talent dedicating their efforts to mission-critical, value-added tasks.

The facts support the growing adoption of automation, too.

A study by Dun & Bradstreet found that 36 percent of businesses had already begun to automate specific financial tasks, and a further 37 percent were planning to integrate adoption into their banking workflows within the next one to two years.

Not to mention, the drastic reduction of manual processes achievable via corporate banking operation automation holds the potential for cultural benefits, too.

Team morale is likely to increase, and the inevitable digitisation of your workflows will be vital for the impending arrival of Generation Z in your workplace, who are both purpose-driven and have only ever known digital solutions; they’re estimated to comprise 27 percent of the global workforce by 2025.

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For more information about 2022’s corporate banking operations trends, read AccessPay’s eBook here.

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