Wednesday, May 1, 2019 Stamford, CT USA — In an era of “Know Your Customer” and other strict documentation requirements, large European companies are crying out for digital solutions that make it easier for them to do business with their banks. Unfortunately for European banks, U.S. rivals (and HSBC) have opened a commanding lead in these critical digital technologies. 

Previously, innovation in corporate banking meant the rollout of new and increasingly sophisticated banking products. “A decade later, the innovation that companies care most about has less to do with financial products and more to do with electronic systems that make banking operations better, cheaper, faster, and easier—and eliminate “pain points” that have come to define the corporate banking customer experience,” says Greenwich Associates Managing Director Dr. Tobias Miarka co-author of European Corporate Banking: U.S. Banks Gain Advantage with Digital Solutions for KYC.

The Digital Gap is a Real Threat to European banks

How are banks doing when it comes to rolling out digital platforms that make life easier for corporates? Roughly half of the 455 European corporate treasury professionals participating in the Greenwich Associates 2018 European Large Corporate Cash Management Study say their banks have not done anything innovative in the past year. 

This lack of enthusiasm about bank innovation is not universal. The biggest corporate banking customers—the treasury centers of multinational and global corporates located in Europe—report high levels of innovation from their banks and high levels of satisfaction with the digital capabilities of their banks overall.

Unfortunately for European banks, the high Greenwich Quality Index (GQI) scores for digital services awarded by multinational corporates go almost entirely to U.S. banks and to a handful of other internationally focused players like HSBC. 

The gap in digital performance represents a real threat to European banks. Once multinationals and other companies integrate these digital platforms with their own internal systems, these relationships will be increasingly difficult to dislodge. The apparent prowess of big U.S. banks in using digital technology to alleviate compliance burdens and improve the customer experience is also bad news for smaller banks. 

“When sophisticated technology solutions are the only things that alleviate serious customer service problems, the biggest banks with the biggest IT budgets have a huge advantage,” says Greenwich Associates Managing Director Markus Ohlig and co-author of the report.