Excellence in client and segment selection is at the center of corporate banking skills and translates into higher return on capital, as a result of lower cost of risk and higher revenues over assets.
Corporate banking is a core activity for banks and plays a pivotal role for the economies they serve. Roughly one-third of the total bank lending and 20% of the total asset base are dedicated to corporate banking activities. The activities of corporate banks are a cornerstone of the economies in which they operate.
Humans and Machines at work
Innovation with equity
Market and profit concentration
Embrace emerging technology to adapt to changing consumer expectations and reduce technical debt.
As many corporate banking services center around the use of balance sheet and the provision of liquidity, all those regulatory initiatives which require banks to either hold more capital, observe certain limits in their balance sheet structure or hold liquidity buffers, will increase the costs for corporate banking businesses and decrease profitability.
Various regulatory initiatives aim to better protect clients from unfair treatment by financial service providers. The greater regulatory focus on conduct, stricter rules on cross-selling, harsh punishment for mis-selling and greater documentation requirements has created operational barriers for banks at the same time as clients are complaining about too much red tape.
Compared to other areas of banking and other industries such as retailing, the understanding of a client’s reaction to price changes remains underdeveloped. At the same time, banks need to ensure they treat clients fairly and demonstrate this commitment to their clients.
As part of reviewing the FIG strategy most of the largest banks have significantly cut their correspondent banking relationships smaller banks therefore need to carefully investigate to what extent they can rely on other banks acting as service providers in other geographies and what service levels they can realistically expect.
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