The treasury services space continues to become more competitive as banks strive to develop profitable services and offerings that can help them differentiate. But as they seek to strengthen relationships with corporate customers, they should bear in mind that these clients are not reflexively investing in "the next big thing." They are interested in support for commercial cards activities, as well as solutions that enhance security and self-service capabilities. But mobile corporate banking? Maybe not so much.
At least, these are the trends indicated by recent research of the corporate banking market conducted by Capital One Bank. Fewer than half -- 48% -- of the finance professionals surveyed by Capital One at the recent Association for Financial Professionals (AFP) Annual Conference said their companies have plans to implement new treasury management tools and/or services this year. Those plans include implementation of corporate mobile banking for a relatively small portion -- 12% -- of the 68% of responding firms that do not already offer the service, according to Capital One.
Despite reports that corporate mobile banking is gaining momentum, adoption is not going to happen as quickly as it has on the consumer side, observes Colleen Taylor, Head of Treasury Management and Enterprise Payments, Capital One Bank. "The world of mobile we are experiencing on the consumer side will move to corporate applications, and banks are anxious to have those in place. But we have to remember the companies that will adopt these corporate implementations aren't consumers," she says. "They have to make sure their corporate policies are in place. They are concerned about security, and that is not misplaced. A mid-market company owner or corporate officer wants to make sure they have the right security in place before using mobile."
Sixty-six percent of the AFP respondents cited security challenges as the primary barrier to widespread adoption of corporate mobile banking, compared to 24% that said their firms were still figuring out their bring-your-own-device policies. Corporate treasurers' need to access information "that is inconvenient to display on a small device" was cited as a barrier by 10% of respondents.
In fact, the capabilities of tablet devices to handle and display more complex transactions are starting to persuade some corporate financial executives to overcome some of their concerns about mobile, Taylor suggests. "I think in the financial space we will see a lot of companies going directly to tablets," she says. "There's more flexibility on a tablet device. We're getting lot of questions these days, around, 'How will it work on my tablet versus how it will work on my phone?' Financial offers are not just clicking 'yes' or 'no' -- they may be approving a transaction for a wire to be released. They need data. The tablet is probably better in that environment for that level of detail."
[RBS Citizens is one bank that is placing big bets on corporate mobile banking: Treasury Services 2.0: RBS Citizens Goes All in on Mobile]
While reservations remain around corporate mobile banking, that is not the case regarding commercial cards, according to Taylor. Fifty-nine percent of the AFP survey respondents said their company uses a commercial credit card to manage payables processing, and of the remaining 41%, 18% said they have plans to start doing so in the coming year. "Commercial cards is a space where we are seeing some advances from a technology perspective," Taylor reports. "This has to do with facilitating larger transactions," as opposed to the primarily travel-and-entertainment focus of the past. Both large and small companies are using commercial cards for functions such as procurement. Additionally, technology is enabling adoption of single-use cards.
Reflecting the mobile-related concerns about security, "there is a whole level of interested in fraud-related tools" such as positive pay, Taylor reports. "They want to have positive pay on all types of transactions."
Taylor also sees opportunities for banks to respond to corporates' growing interest in self-service. Capital One's clients are telling the bank, "'I want to transact online' -- this includes setting up the account, opening the account, and doing it in a secure way," she says. "EBAM [electronic bank account management] is taking off, and we are putting more of the banking experience into the hands of the client. This is an area where we are investing. It's good for them -- they can manage and control their accounts; and it's good for us because it is a less costly way to deliver services to customers."