Fintech adoption in corporate banking, a growing trend in Asia-Pacific

Fintech’s surge in corporate banking sees collaboration between banks and fintechs, signaling a promising future.

As the financial technology landscape continues to evolve, Asia Pacific banks are emerging as leaders in embracing technological advancements.

And whilst retail banking often takes centre stage in discussions about fintech adoption, corporate banking is quietly making strides to integrate these innovations into its operations.

In an exclusive interview with Asian Banking and Finance, industry experts  Veena Rao, Head of Corporate Lending at Finastra, and Athreya H.D., Financial Services Partner at Mazars in Singapore, gave their insights on the current state and future prospects of fintech in corporate banking.

Athreya highlighted the notable shifts in corporate banking due to fintech adoption, especially in areas such as digital payments, cash management, and B2B services.

“Invoice payments have been rampant and disrupting the industry, not just for individuals, but also for corporates,” he said. This transformation has led to collaboration between banks and various service providers, aiming to extend benefits to end-users.

Trade finance and supply chain management have also seen significant digitisation, fueled by technologies like blockchain.

“Traditional trade finance processes are now being digitised by using technology such as blockchain,” said Rao. Additionally, the digital onboarding and customer experience realm is witnessing adoption to reduce risk and enhance transparency.

However, the top Finastra executive said that developments in the last couple of years have led to the current state of fintech funding.

“What we’ve seen in the last year or two is a significant drop in FinTech funding in the sector. It’s down to about 33% to 63 million,” Rao said. “You’re more… almost back to the levels that people are at IT tech funding when the pandemic strapped us in 2020.”

In saying so, Rao believes that due to ongoing global economic challenges, political uncertainties, and recent events indicators such as the collapse of a major company in the US, the full recovery of the FinTech sector is not anticipated until the late 2020s.

Meanwhile, the experts also discussed how corporate banking could replicate the success seen in retail banking’s fintech adoption, with Athreya citing a customer-centric approach and the collaboration of banks and fintechs to solve customer problems.

He also pointed out the importance of embracing emerging technologies like AI and Web 3.0.

For her part, Rao stressed the pattern where corporate banking follows retail banking’s innovation journey, typically with a lag.

She highlighted front-end applications that directly impact corporate customers and SME-oriented solutions.

“Cross-border payments, fraud management, ethics transactions are all areas of innovation in the corporate banking side,” she said, citing them as new trends that involve cooperation between banks and fintechs to create a holistic offering for corporate clients.

Both Rao and Athreya concurred that the key to future success lies in “coopetition.”

The believe that the relationship between banks and fintechs is shifting from competition to coopetition, where both parties collaborate to enhance offerings.

The co-optation model involves fintechs introducing technological innovations whilst banks bring their risk management and operational capabilities. This synergy aims to create an ecosystem that delights corporate clients, facilitating greater fintech adoption.

In conclusion, the Asia Pacific region is becoming a FinTech powerhouse, with corporate banking following the trend set by retail banking in adopting innovative solutions.

The co-optation of banks and fintechs, driven by customer expectations and operational efficiency goals, promises a promising future for fintech in corporate banking.

For more updates on financial trends and technology, visit asianbankingandfinance.net.