East & Partners second Research Note in this three-part series delves into corporates’ behavioural responses to the COVID-19 crisis versus how they navigated previous bouts of market instability. The insights are presented by regional business banking product market across Australia, Asia and Europe.

Co-creation – the collaborative development of a new solution with third parties including experts, customers, vendors and suppliers – is slowly taking root within the financial sector. Banks today are increasingly opening their doors to work with FinTech’s and the broader community to enhance their service offerings.

Rather than taking the traditional approach of developing solutions in-house, a number of banks such as Standard Chartered have formed commercial partnerships with FinTech’s including TradeIX for blockchain-based trade finance platform and Infor’s GT Nexus Commerce Network for cloud-based supply chain data.

DBS and ICICI Bank, meanwhile, are building an ecosystem of services by using application programming interface (API) technology to connect with their partners. Other common approaches adopted by banks in the region include organising hackathons to explore customer-centric innovative solutions and setting up collaborative innovation labs.

In fact, 64 percent of the banks in Asia Pacific and Middle East are now actively involved in co-creating, according to research by the Asian Banker. While collaboration with technology suppliers and experts has been under way for some time for these selected banks, has the same spirit of co-development been emulated with their corporate customers?

Should the culture of collaboration be extended to these business customers to enhance value creation? How will the behavioural impact of coronavirus pandemic and global macro dynamics change the way the industry is planning to ride the wave of digitisation?

Innovation Support: An Immediate Need

Based on recent conversations with close to 800 large corporates globally, we have found that offering technology support has emerged as the most important service factor primary relationship managers can use to add value to their corporate customers in the next normal, aside from being champions of their business within the bank.

This is cited by nearly one in five corporates across the globe, ahead of other initiatives including offering benchmarking competitive analysis, providing industry specific advice, and sharing financial knowledge and experience – a marked difference from the pre-COVID era. The pandemic has given a real tailwind to digital adoption as businesses scramble to adapt to operational and supply chain changes happening overnight, along with remote customer acquisition.

In Asia where most businesses have embarked on their digital journey much later than their counterparts in the US, Europe and UK, this need for innovation guidance is especially acute. More than 35 percent of large corporates in Singapore see technology support as an important element of successful relationship management, and so do one in four businesses in Hong Kong and China.

Most Important Service Metrics from Relationship Managers
% of Total

Source: East & Partners Global Insights Report: Relationship Management Post-COVID (N = 748)

Customer Co-Creation: The Next Institutional Banking Relationship Frontier

Building on this flight to digital in transactional banking, co-creation is emerging as a new way of value creation. With ongoing conversations and feedback gathered from clients, co-creation has the potential to increase customer loyalty and ultimately create high-quality products that truly address businesses’ pain points. More crucially, it demonstrates that the bank partner is listening.

“When I first started in banking, the industry tried to build and own everything. Since then, the tide has really turned. But if you have the ability to collaborate, build an internal network and tap an ongoing pipeline of opportunities, this can be very effective and advantageous. This is the case for Citi Ventures”
- Citi’s APAC Head Trade and Treasury Solutions (TTS) Innovation, Scott Southall.

East & Partners latest transaction banking markets research shows that an enormous volume of digital engagement with banks is already underway among large corporates in Asia. Close to seven in ten of the Top 1,000 corporates in the region are considering co-developing or simply buying business specific digital solutions from their primary transaction bank and another 27 percent are planning to do so in the next 12 months.

Transaction banking providers who make this shift to customer co-creation and deliver customer-centric digital solutions along with superior experiences have the opportunity to expand and deepen customer relationships that will last well into the next normal.

Co-Developing / Purchasing Digital Solutions from Primary Transaction Bank: 2020 Snapshot
% of Total

Source: East & Partners Asian Transaction Banking Markets Program – H2 2020 (N = 941)

High Priority Areas For Digital Engagement

Diving deeper into the core areas in which these businesses are looking to work closely with their transaction banks to develop efficient transactional solutions, smart contracts are highlighted as the top-most focus, nominated by more than half of regional Top 1,000 corporates.

This is followed by blockchain-based trade finance solutions, cross-border payments tracking, corporate-bank connectivity, global cash visibility, and improving functionality aspects like reporting, cash forecasting, predictive analytics, alerts and digital signatures – all of which are cited by over 30 percent of large corporates in Asia.

Core Focus Areas to Target
% of Total

Source: East & Partners Asian Transaction Banking Markets Program – H2 2020 (N = 941)

Next month East & Partners third Research Note in this series addresses how Europe’s corporates seek to overcome liquidity issues in a time where cash flow has been so severely disrupted.