The banking industry isn’t limited to loan financing and managing interest rates on savings accounts anymore. It is changing into a more dynamic front with several pre-defined and highly specialized business processes that go from customer onboarding all the way to customer service. In the retail banking sector, banking entities now have to worry about social media presence as well as quick grievance redressal systems before a complaint turns into a social media storm.

However, the challenges in the corporate banking sector are much different. Here, banks don’t just have to manage their customers but also ensure that their strategic decisions fall in line with their current goals. Here are some of the biggest challenges in corporate banking that could pose a threat to the banking companies.

Digital revolution

About 15 years ago, having a website that could tell users about a bank’s offerings was considered to be an online revolution. Since then, times have changed quickly, and a fully-functional, low downtime and highly interactive website and app are considered the bottom line for any bank.

The roots of the digital revolution go deeper into an organization. For instance, the software used to facilitate transactions, cross-bank settlement systems, intra-bank settlement systems, online services, etc. are important for banks now. Not only this, experimentation with blockchains, AI and other emerging technologies are also becoming a sign of banks that are innovative and leading the industry from the front. Other banks only follow the trends, and some not so effectively.

Changing organizational structure

Banks are not just becoming more digital, but their organizational structures are changing drastically as well. Now, banks’ business models are being driven by data, automation and secure cloud-based computing which is demanding front-to-back transformation at companies. Not all banks are completely comfortable with this change.

Competition from startups

In the corporate banking sector, a startup with deep pockets, VC funding, and an innovative idea is nothing short of a headache. Unfortunately for banks, the fintech industry is growing rapidly and creating more space for corporate lenders who work in more technologically advanced ways and have leaner business models.

Valuation problems

Acquisitions and mergers are two of the most important aspects of corporate banking. However, valuation troubles always haunt banks in these situations. Regardless of the tag that a company decides for its acquisitions, banks have to remain proactive, study the entire industrial outlook and then decide a viable and feasible evaluation for a company that is being acquired or merged. As the acquisition is being financed in part or whole by the bank, finding appropriate valuation is crucial.

Creating a service identity

Banks are being bombarded with competition from left, right, and center. In the wake of these situations, the least they can do is ensure that they maintain a brand image that revolves around the quality of their service as well as their willingness to innovate in the face of challenges.

Interestingly, many of these troubles can be solved if only banks have credible technology and corporate banking partners who help these entities transform for the new age while minimizing risk.