Banking has undergone a major shift in recent years thanks to the advent and advancement of digital banking technology. This shift has also been accelerated by the COVID-19 pandemic, with lending, trade finance and cash management functions all under pressure to operate and serve in a digital-first environment.

New research from Finastra has shone a light on what this means for the industry. We found that corporate banks in APAC are moving away from a model where relationship managers build relationships with corporates in order to cross-sell additional services. Instead, banks are seeking to become digitally-powered ‘platform players’ that can offer their clients real-time analysis and execution.

Although this might sound like the end of the relationship manager role, it actually means that – through access to more accurate and relevant data – they will be empowered to make faster and better decisions.

In order to meet clients’ requirements for value-added services, real-time execution, and self-service, digital transformation has been elevated to an immediate-term priority for many banks. In our research, banks told us that their core focus over the next five years will be enhancing their digital capabilities, as well as positioning themselves as platform players, in order to automate and accelerate processes for their smaller corporate customers in particular. The benefits of this shift are clear: cost efficiencies, simple platform integration, cross-selling opportunities, and better compliance processes.

While the COVID-19 pandemic has accelerated the need for digital transformation, it has also exposed a number of gaps in banks’ digital offerings. Finastra’s research found that cloud technology and digital signatures are the main digital tools that banks do not yet have access to but require to function effectively in the current situation. E-documentation and cybersecurity were found to be particularly important for lending, while artificial intelligence was the main requirement for cash management.

Finastra’s research also uncovered several barriers to successful transition – particularly regarding investment requirements, regulation and data security – which the banks will need to overcome in order to meet customer expectations.

This is likely to require large-scale changes to banks’ operations and ways of working, but most banks don’t have the skills and resources to do this themselves, so many are collaborating with third parties. In fact, 75% of banks worldwide – 83% in APAC – are already working with fintechs or will be in the next year.

For me, the benefits of this approach are clear. Banks benefit from cutting-edge tech, at a much lower cost than developing it themselves in-house, and with a faster implementation time. Fintech solutions can also be upgraded easily, which future-proofs banks and saves costs.

Finally, but importantly, by managing integration with banks’ existing systems and ensuring standardization across the business, fintechs can help banks with two of their major pain points: regulation and data security.

The COVID-19 pandemic has forced and accelerated a change in the industry around digitalisation. Now, commercial and business banks must decide what type of bank they want to be and put in place a strategy to enable this business model change.

Finastra’s research has shown clearly that banks are moving away from a pure relationship-based model and looking at how they can better leverage technology to meet their customers’ needs, moving towards becoming platform players. For this to happen successfully, banks need to have a defined digital transformation strategy in place and, just as importantly, find trusted, flexible partners that can help them on this journey.