Time for corporate bankers to shift from transactions to trust 

IN AN increasingly complex and rapidly evolving business environment, corporates are facing new pressures, leading them to put new and increasing demands on banks. Businesses want to foster strategic partnerships, moving away from the traditional transactional relationship in order to stay ahead of economic and societal change.

This push is being driven by mega trends including digitisation, supply chain disruptions and sustainability, not to mention an increasingly competitive business environment within a shifting geopolitical landscape. This requires the bankers of today to be like advisers solving digitalisation, financial supply chain and decarbonisation challenges.

Research has shown that overall satisfaction with commercial banks is slipping globally. Only 9 per cent of the respondents to The Global Treasurer’s 2023 CGI Transaction Banking Survey said they were “very satisfied” with the service they received from their banking partners, down from 16 per cent in the same survey in 2022.

Meanwhile, there were upticks in respondents landing in the middle of the scale, suggesting that clients are becoming more discerning in how they rate their banking partners. A key area where respondents thought their bankers could do more in is to provide them with strategic advisory and insights, beyond offering best-in-class banking products.

Banks that want to stay relevant must respond to these heightened expectations. One clear way to do this is by revitalising their approach to relationship management. Traditionally, the relationship between corporates and their relationship managers was largely transactional – when the client needed a loan for a new project or expansion of a business line, they would reach out to their banker.

Now, corporate clients demand a more strategic relationship with their bankers. In fact, about 54 per cent of respondents to the above survey ranked having a strategic and long-term partnership as the most important factor when reviewing a relationship with a bank.

That means, for instance, having a nuanced understanding of the regulatory environment in which a company operates, both at home and abroad. If the company wants to open a new entity overseas, bankers must be able to deftly guide them through that nation’s regulatory maze.

Bankers also need a deeper understanding of how a client’s business operates so they can provide inputs on how to build out a broader network of suppliers, improve the customer experience, and effectively manage capital expenditures.

Becoming a trusted adviser

Forging a long-term partnership with corporate clients will not happen overnight. It requires a cultural shift that not just puts clients’ needs first, but also transforms the traditional transactional and vendor relationship to a partnership with a trusted adviser.

In this transition, relationship managers must stay on top of a host of market trends impacting a client’s business, including the growth of digital tools, climate change and sustainability, new market entrants, potential business partners and suppliers, and the changing regulatory landscape at home and abroad.

This new advisory role requires relationship managers to be proactive in sharing insights, and curate solutions from the bank and partners to solve pain points. Rather than be reactionary to a client’s request for information, relationship managers should proactively update them on new market trends or government initiatives that could have direct impacts on their future business viability.

Getting to that stage necessitates banks taking on a more active role in assessing and training their relationship management workforce. Conducting a thorough internal talent evaluation is a critical first step. It is important to know if employees have the right skills and resources to enter this new phase of relationship-building. Banks can leverage various tools to assess their workforce, including voice-of-client surveys, capabilities or productivity benchmarking, and bankers’ self-assessment.

Beyond that, investing to raise employees’ knowledge and capabilities should also be a priority. Taking sustainability as an example, an advisory role requires bankers to understand the differences in technologies, certifications, financing needs and environmental risk mitigation methods in decarbonising a building versus a piece of agricultural farmland.

Instead of viewing learning and development as a cost, banks should emphasise it as a strategic priority. Central to that is pivoting how employees are trained. Consultancy Oliver Wyman’s research suggests that capabilities-focused and impact-driven training is effective in changing frontline behaviour, increasing cross-sell, and driving potential revenue from key clients by up to 90 per cent. Training should be focused, practical, interactive and action-oriented.

As an example, UOB worked with Oliver Wyman to roll out a training programme empowering relationship managers to become trusted advisers to clients. It included interactive workshops where participants, for instance, gained a deeper understanding of how they should engage their clients actively on sustainability across the sales process.

The training included live case studies of sustainable finance deals aimed at highlighting key learnings and best practices. The programme culminated in a shark tank pitch for participants to apply theory to practice, where they delivered a sustainability pitch for an actual client.

Embracing change

Pressure from clients shows no sign of easing. Having a well-trained relationship manager workforce is crucial if banks are going to position themselves as valuable partners in helping clients understand and respond to economic and societal shifts.

Ensuring that relationship managers have a deep understanding of their clients’ businesses, including their future endeavours, will enable them to provide actionable recommendations. Ultimately, fostering strategic adviser capabilities in bank relationship managers not only strengthens client relationships, but also positions banks as a proactive and forward-thinking partner.

Mok Wen Jie is a partner at Oliver Wyman and Lim Lay Wah is group head of global financial institutions group and sector solutions group at UOB