What Happened to Sticky Corporate Customers?
As corporates swing into action by recalibrating supplier networks and preferred trade corridors to shore up disrupted supply chains, so too has corporate treasurers’ management of Cross Border Payments.
Supply chains have traditionally been optimised for cost and efficiency however resilience and transparency now takes centre stage as an enormous supply chain management shake-up takes place. In terms of product usage among Australian middle market enterprises, Cross Broder Payments (59 percent) and Full-Service International Transaction Banking (42 percent) are now in demand by one in two enterprises, effectively doubling within the last decade and accelerating rapidly in the last two years in particular.
Despite the marked increase in the use of Cross Border Payments, wallet share has continued to deteriorate as competition intensifies among leading transaction banks including ANZ, CBA, Citi, HSBC and NAB noting significant jostling for position in the last 18 months.
Best Practice Customer Retention Examples
The rise in multi-banking for Cross Border Payments has resulted in a five percent decrease in wallet share on average across all providers, trending steadily lower from a high of 67 percent recorded in 2011 to 39 percent as of 2022.
Only two Banks managed to improve customer retention in 2021 as all other providers continue to suffer significant ‘leakage’.
There are three clear areas of opportunity for banks to increase retention within the lucrative middle market.
As CFOs scramble to adapt to logistics bottlenecks and the “new normal” of higher costs, so too does businesses’ need for appropriate banking and payment products. The Big Four Australian majors are being pressured by international competitors and must refocus on servicing clients who are targeting the international stage at a time of immense upheaval.
In most instances corporates are actually prepared to pay a premium for specialised advice relevant to their industry sector vertical and business itself instead of turning to their friends, colleagues, suppliers or even competitor Banks for trusted advice.
"If they are (offering specialised advice), we haven’t
seen it. We’d quite happily pay a service fee
if they brought this kind of value to the table"
Group Treasurer, US$20Bn USA Manufacturer
What Next for Cross Border Payments?
Superior service, pricing and transparency within Cross Border Payments and International Transaction Banking will be a key driver for the major’s sustained relationship share growth. Banks must streamline the internal siloed nature of divisional dealings and encourage closer interaction between business units – particularly cash management and FX risk management to support CFOs with currency forecasting management.
It is imperative for providers to refocus on customer needs across all interactions as Australian corporates react to Open Banking reform and innovative digital platforms.
Cross Border Payments Wallet Share
Average % of Business per Primary Relationship
Source: East & Partners Corporate Transaction Banking Program – February 2022