By Jane Winterbottom – firstname.lastname@example.org
Temenos Group AG, a renowned leader in the banking software industry, was originally founded in 1993 and is now established as a dominant market presence in the financial-services software sector. The company, listed on the Swiss Stock Exchange with the ticker symbol TEMN, has become renowned in the area of development of software systems tailored to the needs of retail, corporate, universal, private, Islamic, microfinance and community banks, wealth managers, and other financial institutions.
Together with IDC Financial Insights, Temenos has carried out an extensive Corporate Treasurers e-Payments survey—collecting responses from more than 245 senior officials and corporate treasurers of firms that are members of the FTSE 500. ePayments, defined as any payment originating through an electronic channel such as online bill pay, credit card, ACH (automated clearing house) and wire transfers, were at the heart of the survey research. The survey was designed to determine customer satisfaction levels with various bank providers of ePayments services—focussed on identifying trends, consistencies, variations in the market, and to form opinions and guidance on the ePayments-services sector. The results represent companies with a combined market capitalization of over one trillion USD, spanning seven regions from across the globe—including Africa, Asia-Pacific, Australasia, Europe, Latin America, the Middle East (Gulf Cooperation Council) and North America—and stemming from five key sectors of industry: automobile, manufacturing, pharmaceuticals, retail and technology.
The results of the survey have revealed that a trend towards alternative providers of ePayments services may be gaining momentum, proving to be a significant threat to traditional banks’ ePayments services. The most significant finding from the survey is that, on average, 63 percent of corporate customers globally are dissatisfied with the ePayments services they currently receive from their banks. The results have indicated that Temenos customers have been more profitable than their peers during the period of 2008 to 2012. Additionally, the survey has indicated that Temenos customers have enjoyed a 32-percent higher return on assets on average as well as a 42-percent higher return on equity. These customers have also achieved an 8.1-percent lower cost-to-income ratio than banks running legacy applications, according to the survey findings. The relationship between the bank and the corporate customer, once almost indissoluble, is becoming more fragile as companies seek to reduce risk by establishing multiple banking relationships. As alternatives appear in the market, promising to deliver innovative services that legacy bank systems lack, competition has been ramping up. In fact, almost 25 percent of the treasurers reported that they have been investigating alternative, non-bank ePayments providers.
The corporate payments industry is at a pivotal inflection point, balanced between disintermediation and opportunity. Although the potential for disintermediation is strong and imminent, the opportunity for banks to respond to customer dissatisfaction and concerns is still a real consideration. Banks still have the chance to improve services to meet clients’ needs more effectively and efficiently when it comes to corporate payments services. The survey recorded a high level of dissatisfaction among treasurers, with, on average, only nine percent reporting themselves as “satisfied” or “moderately satisfied” with their ePayments services. This stands in sharp contrast to the abundant profitability opportunities currently offered by corporate banking, with payments and international trade showing strong growth. Banks’ failure to take advantage of these opportunities is leaving them open to disintermediation, with 47 percent of respondents within Europe having investigated alternative payment providers.
The survey identified tangible ways for banks to improve their ePayments services, through gathering information on the pain points most commonly experienced by treasurers. The lack of a universal view and the inability to access and create a single picture from multiple systems scored highest in the survey. The former was predictably the top item on the corporates’ “wish lists”, recorded by 91 percent of the respondents. Transparency and control are consistent themes of client concerns throughout the survey from start to finish. In order to manage their businesses, corporate treasurers today need to track and respond to changing market conditions faster than ever. Ease of use and response time have become as critical as any other metric in ensuring success, and based on the survey results, it does not seem as if banks are keeping up with their customers’ requirements in making that happen. Security concerns ranked high in only one or two geographies, perhaps because security is seen as a core banking function. The remaining client concerns included the lack of payment deferral, the requirement to prioritise payments and the inadequacy of mobile-payment functionalities. Overall, the survey revealed that resolving client concerns and offering value-added payment services is the route forward for banks wishing to improve their overall profitability through corporate-banking services. The technology for achieving this already exists, and this makes the next steps logical for banks to act quickly and institute the necessary changes if they are to avoid losing out to alternative providers.
For businesses in the corporate payments sector, the focus should be more on innovating to meet customer needs specifically. The survey has revealed a low level of satisfaction with ePayments services, and almost a third of respondents rated their satisfaction level as “neutral”. By addressing client concerns head-on, these providers may see the survey responses improved to “satisfied” next time around. Change is crucial in retaining business, especially within a technology space in which gaps in the market are quickly identified and captured by dynamic and innovative start-up firms. Technology has developed to the point of being able to neutralise the dislocations in the services provided for corporate payments. Corporate customers demand more from their service providers, and the opportunity to improve service is available. The next step will be to rise to the challenge. The results will prove fortuitous for all involved—stimulating business, improving efficiency and strengthening business relationships to drive growth into the future.