2020

COMMERCIAL
BANKING
KEY DIGITAL
TRENDS
2020 “From the front office
to onboarding and loan
COMMERCIAL origination, some thought

BANKING they’d automatically

KEY DIGITAL
realize end-to-end digital
transformation this way.”

TRENDS For at least five years, commercial banks have placed

big bets on major technology investments. From the
front office to onboarding and loan origination, some
thought they’d automatically realize end-to-end digital
transformation this way. Investments in platforms like
Salesforce, Dynamics, nCino and Fenergo have been
deemed once-in-a-career game changers that will
move the commercial banks beyond woefully complex,
manual processes that clients have suffered with since
the dawn of banking.

2 COMMERCIAL BANKING TRENDS 2020

While banks have made tremendous progress in digitizing their CONTENTS
foundations, the best is yet to come. We see 2020 as the year
commercial banks move from digitized to digital by building on Commercial banking: Beyond the digital foundation....... 4
these investments and unleashing the power of rich data.
A new breed: The empowered banker............................... 5
Whether it’s placing AI- and analytics-driven insights at RMs’
fingertips to improve customer interactions and increase CRM Intelligent automation for commercial banking............... 6
adoption, or digital decoupling and choosing the right fintech
Relevant AI in a post-digital world..................................... 7
partners, in 2020 banks will build on these investments to
leverage the power of digital. Unloading legacy baggage................................................ 8

If that’s not enough, banks are still solving for the LIBOR transition Integration with the digital ecosystem.............................. 9
and many are on the cusp of a loan servicing transformation
related to the AFS Level III mandate—all during a potential wave of
M&A activity. 2020 will be an exciting year, and while five years ago
I was right in saying the next five years would be the most exciting
for commercial banks, the same holds true for the next five.

Here’s to the Roaring ‘20s in commercial banking.

JARED RORRER
Managing Director —
Global Commercial Banking Lead
[email protected]

3 COMMERCIAL BANKING TRENDS 2020

 1 Commercial banking: Beyond the digital foundation
This is where transformation really gets going

THE TREND THE EVIDENCE

Commercial banks have invested significantly in operational and CRM Accenture research reveals that $27bn has been invested in North American
platforms, in the hope that their digital transformations would happen by fintechs offering SME services since 2010 and more than $1.3bn invested in
default. In fact, the transformation is just beginning. By digitizing their European fintechs offering services to SMEs in 2018 alone.
analog processes across sales and credit functions, they can access dark
data and build on those platforms to become truly digital commercial banks. EXAMPLE
Truly digital environments experience transformational, not incremental, A large Thai banking group is implementing a transformational digital
change. Winners enable full digital capability, which means decoupling strategy that will set the pace among its rivals. While the strategy has started
data from the IT stack and driving pervasive connectivity. It combines the on the retail banking side, the commercial banking transformation will go
strengths of platforms like Salesforce, nCino, Fenergo, Bitvore, Precision far beyond incremental change and cost-cutting and include deep process
Lender and Zafin, connecting them and creating additional value from transformation that involves digital customer interfaces and an entirely
existing business while unlocking new revenue streams. Nobody is emerging different business model.
as a clear winner yet, but those that don’t lead, or follow very quickly, will lag
the commercial banking pack. THE FUTURE

THE BENEFITS Emotionally, the end of the arduous and expensive digitization process feels
like the end of the transformation journey—but the next level involves much
Unlocking digital capability is both easier and less expensive than building lower investment for much higher returns. Industries like retail should be
digital foundations, but it’s a crucial hurdle—spending a bit more to get a lot viewed as omens of what is to come for commercial banking. As fintechs,
more value. A relatively small investment can realize auto-decisioning and AI and all digital capabilities continue to mature, the imminent threat of new
augmented credit decisions along with real data and new insights for RMs competitors will grow, and banks that don’t transform to digital in the next
that precipitate deeper client relationships, ultimately improving efficiency decade will find themselves left behind by default.
and sales. Additional data will improve credit quality and allow for returns to
be quantified. RMs will leverage technology to derive value beyond simple
management reporting.
A connected ecosystem of supporting technologies also makes the whole
greater than the sum of the parts. The more data collected and effectively
analyzed, the more banks can provide better and more specific client
insights to drive cross-sell opportunities and value-add client discussions.

4 COMMERCIAL BANKING TRENDS 2020

 2 A new breed: The empowered banker
Tomorrow’s RMs are engaging their clients with hugely enhanced insights

THE TREND EXAMPLES

A new breed of commercial banking relationship managers is poised to Accenture helped an APAC commercial bank acquire more SME customers
grow revenues and customer satisfaction for their employers, using vastly using an analytics insight platform built on both the bank’s and third
improved business insights that reveal the hottest cross- and up-selling party data, to generate sales leads. The results? Growth of 46% in loan
opportunities and make the sales process far more efficient. Instead of being applications, 54% in loan disbursement and 40% in identified cross-sell
limited to accountability tools, RMs will seek out technology that provides opportunities. A multinational European bank recently deployed a smart
rich, indispensable client discussion data. Whatever stage of the building insight platform to several hundred RMs and has seen significant growth in
process they’re in, and whether or not their teams use tools like Salesforce revenue and conversion rate with drastically reduced prospecting time.
and nCino for CRM and loan origination, commercial and wholesale banks
need to understand the profound advantage that true digital banking THE FUTURE
provides. It’s no surprise that the majority of NA banks are trying to define RMs won’t go away in 2020—their reality will be augmented by data and
how to digitally enable their RMs. insights that fundamentally change the way they interact with clients
and their tools. This has enormous workforce transformation implications
THE BENEFITS and banks should prepare immediately. Banks will begin to organize and use
Client segmentation techniques enable banks to focus their energy on data quickly, combining existing digital platforms with data and real-time
activities that generate the best returns by optimizing RM coverage and collaboration. Digital toolsets will give them the ability to target and
loading. Third party data providers and analytics insights can facilitate manage relationships at a whole new level, and integrate information from
cross- and up-selling opportunities to enhance RM time allocation and sales key platforms like Salesforce, nCino, Bitvore, Precision Lender, Greenwich,
generation efforts. and more. Building on the digital foundation will give them access to a
wealth of dynamic, interconnected commercial banking benefits.
THE EVIDENCE
Accenture research suggests that the vast majority of SME customers would
not give up their RM for a digital-only offering, even if offered at a cheaper
“It’s no surprise that the majority of
price*. RMs remain a vital channel for banks to build relationships with their NA banks are trying to define how to
SME customers, if leveraged correctly. digitally enable their RMs.”

* Source: Accenture SME UK 2019 Survey

5 COMMERCIAL BANKING TRENDS 2020

 3 Intelligent automation for commercial banking
Partnering with machines: A key to unlocking value

THE TREND EXAMPLES

Innovators have long sought ways to use machines to lighten or eliminate A major US bank achieved a reduction of 38%+ in time-to-loan funding
human workloads. The digital revolution has intensified the process through simplified and standardized commercial lending origination
by combining data, analytics and machine learning/AI. Commercial processes. It embedded automation in each step of the process and
banking has some interesting nuances in this respect. Complex operating leveraged global skills to further analyze the data accessible
models, products and processes make both entry and scalability difficult. through automated processes. It continues to drive an enhanced
Intelligent automation is one of the most important tools for any digital borrower experience.
commercial bank platform, where machines can augment costly relationship
management resources. Progressive banks are leveraging their proven A large global bank unlocked the value of technology investments utilizing
business process outsourcing partners to unlock additional value as they RPA, machine learning, and a BPO partner to triage exceptions and
automate and drive to a digital bank platform. minimize relationship losses. Technology has enabled enhanced relationship
management and reduced relationship attrition by 10%. A large UK bank has
THE BENEFITS delivered an intelligent-automation-based CRM platform that provides a 66%
Customer experiences are vastly improved with automation that provides reduction in customer waiting times, a 50% increase in lead conversion and
faster answers, shorter turnaround times, and transaction transparency. a 10% reduction in resources.
A step change in decision making is possible, with data appropriately and
promptly packaged for both customers and bank employees. THE FUTURE
New commercial banking entrants are focused on creating fully digital
THE EVIDENCE offerings. This market dynamic requires commercial banks to invest in
Cost and speed, improved by automation, remain key buying factors for transforming their operations. Commercial banks have a plethora of
SMEs and middle market/mid corps in relation to banking services. partners to help them drive intelligent automation across their enterprise.
More than 20% of SMEs want a bank that delivers fully automated process. 2020 will see a further acceleration of this trend as balance sheets feel
More than 60% of SMEs see advantages in AI over traditional human the strain of the economic cycle, and executives continue to strive for
interactions*. Robotic process automation reduces average handling enhanced customer experiences.
times by 40%, has 1.5X to 2.5X more productive availability and will reduce
operating costs by 50-80%**.

* Accenture SME UK Survey 2019

** Accenture Research on European Commission data (Digital Scoreboard key indicators) and CB Insights Global Fintech Report 2Q 2018

6 COMMERCIAL BANKING TRENDS 2020

 4 Relevant AI in a post-digital world
Opportunities expanding faster than banks’ adoption

THE TREND THE EVIDENCE

Almost all commercial banks have implemented a pilot or focused solution A large majority (83%) of C-suite executives believe they must leverage AI
utilizing predictive analytics across specific areas of their lifecycle. to achieve their growth objectives, yet 71% report they struggle with how
With these focused solutions, many banks have formed their analytic to scale*. Three out of four believe that if they don’t scale AI in the next five
capability foundations across governance, skill set development and value years, they risk going out of business entirely.
assessment. Unfortunately, banks are not keeping up with the demands of
the post-digital world—for two main reasons. Firstly, widespread use EXAMPLES
to enable an end-to-end customer experience and accelerated or even A major Asian bank redesigned and deployed an integrated customer
real-time decisioning has been limited to the most sophisticated banks, experience across all digital/mobile channels, powered by AI/ML. It enabled
or pockets, across the globe (APAC, Eastern Europe). Secondly, fintechs near-real-time decisions in marketing, spreading, risking, multi-offer and
are expanding their presence with focused solutions within specific KYC/AML, with 70% success rates across its SME and commercial portfolios.
micro-segments and real-time decisions, resulting in higher returns. A leading US bank redesigned its end-to-end customer workflow including
AI/ML to spread financials and drive real-time analytics to make decisions
THE BENEFITS about 75% of its under-$25m portfolio in less than a day.
By leveraging the treasure trove (five zettabytes) of data currently available
worldwide, AI enables personalized interactions and relevant, timely THE FUTURE
and convenient banking. Cloud and API innovation is happening at an Banks must figure out effective strategies to remain viable players in a
unprecedented pace, enabling financial institutions (with help from strategic changing landscape. Options will include ecosystem partnerships, mergers
service providers) to significantly reduce their cost structures. Open source and acquisitions and expansion or upskilling of talent. Four fundamental
tools, education and technology, and AI and ML analytic methodologies trends will accelerate the introduction and adoption of new toolsets in the
have made digital adoption much easier. market: the explosion of customer risk and behavioral data; differentiated
feature engineering; the power of intelligent data; and technology advances
with cloud and 5G mobile channels. All of these will enable more tailored,
real-time customer solutions.

* Source: Accenture AI: Built to Scale study, November 2019.

7 COMMERCIAL BANKING TRENDS 2020

 5 Unloading legacy baggage
Digital decoupling and microservices allow innovation to take flight

THE TREND making and an intelligent digital signals-to-sales marketing engine.

Digital decoupling strategies in commercial banking are leveraging A well-known Spanish bank brought retail bank digital architecture to
microservices to move banks to flexible, scalable cloud-based data commercial banking operations while overhauling its technology platforms.
platforms for legacy-free innovation. While legacy banking systems are often The bank uses credit card transaction data to help Spanish retailers take
resilient, reliable and cost-effective, they also hamstring change efforts. informed decisions, understand customer buying patterns and compare
Specifically, there are challenges with aging infrastructure, data availability their sales with those of competitors. The bank also serves US entrepreneurs
and quality, skill set deficiencies and risk aversion. via digital accounts: enabling national and international payments, bill
payments and e-commerce/point-of-sale integration. A leading Danish bank
THE BENEFITS built a digital client-centric platform that enables RMs to support clients by
providing flexible cross-silo product bundles to solve client problems rather
Digital decoupling is the answer to these challenges. It provides an than leaving clients to figure out which products best combine to meet
opportunity to capitalize on digital investments through efficient digital their needs.
engagement, more agile and cost-effective change and innovation—and
optimized customer experiences unaffected by outdated data structures THE FUTURE
and overnight batch runs.
The digital bank requires data quality and completeness, as well as
THE EVIDENCE compliance and residency solutions—depending on geography. But people
also matter. Finding talent can be a challenge, but extending the aging
Ninety-two of the Top 100 banks globally still rely on their legacy mainframe workforce and motivating millennials to learn decades-old technology
and systems.* Though front-office IT spend is growing at a slightly faster is even worse. The answer lies in strategic sourcing—a small team with
pace than back-office support in wholesale banking, the amount spent on core competencies partnering with skilled providers to manage new
the back-office is nearly double the investment in direct customer (front- technologies. Cloud-based technologies further decrease the need for
office) interaction.** in-house IT staff. Finally, there’s risk associated with replacing core platforms.
Your career is on the line but in truth, the risk is to your whole business.
EXAMPLES Effective risk management requires clear goals, knowledge of proven,
A major Thai commercial bank now uses its legacy platform as a system of available tools and access to a strong implementation partner to share
record with synchronous data replication to a data lake. Salesforce and Pega in risk and vision, not just deliver a project.
are used to drive mobile personal loan origination workflow, instant decision

* Financial News, Banks face spiraling costs from 50-year-old IT, October 2, 2017
** Ovum (TMT Intelligence / Informa), January 2018

8 COMMERCIAL BANKING TRENDS 2020

 6 Integration with the digital ecosystem
Banks that spurn partnerships struggle to maintain the pace

THE TREND EXAMPLES

Commercial banks that are not using the power of technology ecosystem A large German bank has partnered with online accountancy software
partnerships are already at a disadvantage. Leaders like nCino and suppliers to provide analytics and insight on future cash flow patterns and
Salesforce are already on the fintech trail. The question for commercial improved treasury management propositions for its commercial customers.
banks is: which commoditized parts of the technology stack should be A major US bank streamlines data exchange and messaging processes that
outsourced? This has to happen while maintaining an internal ecosystem can be integrated through APIs with corporate ERP platforms, providing
sufficiently agile to compete with fintechs and retaining a competitive a single channel for automated payments, FX services and account
advantage. In many geographies, Open Banking is at full throttle and information. A large UK SME lender that uses customer and account data
2020 will be about further differentiating products and providing services from other UK banks via API connectivity recently overtook an international
that are rooted in what the customer truly needs. The plethora of data competitor to grab a large share of the SME lending market in the UK.
availability and integration options that Open Banking provides enables a
rich ecosystem that includes vendor-partners (SaaS models), data providers, THE FUTURE
or other banks—all partners that potentially enable an optimized In 2020, banks will expand their ecosystems and expose more data. The
customer experience. rise of fintechs and neo-banks using external data through Open Banking
to provide credit decisions, account aggregation services and truly unique
THE BENEFITS propositions for commercial customers will accelerate. More traditional
By creating and operating in open-platform-driven digital ecosystems, banks commercial banks should find ways to monetize their data or risk becoming
can offer optimized services addressing imminent customer needs to retain commodities for more innovative players. Banks in Europe (77%), NA (72%)
loyalty and grow revenues. and Asia (61%) plan to invest up to $20m each to undertake Open Banking
initiatives for commercial customers.**
THE EVIDENCE
More than $1.3bn has been invested in European fintechs offering
services to SMEs in 2018—mainly SME lending and merchant acquisition.
“More traditional commercial banks should
European Open Banking initiatives leading up to 2020 will result in find ways to monetize their data or risk becoming
increased corporate banking revenues of nearly €7bn.* commodities for more innovative players.”

* Accenture Research analysis on CB Insights data

** Accenture 2018 Open Banking Survey

9 COMMERCIAL BANKING TRENDS 2020

For more information About Accenture
Accenture is a leading global professional services company, providing
CONTACT JARED RORRER
a broad range of services and solutions in strategy, consulting, digital,
Managing Director — technology and operations. Combining unmatched experience and
Global Commercial Banking Lead
specialized skills across more than 40 industries and all business functions—
[email protected]
underpinned by the world’s largest delivery network—Accenture works at
accenture.com/CommercialBanking the intersection of business and technology to help clients improve their
performance and create sustainable value for their stakeholders. With more
than 505,000 people serving clients in more than 120 countries, Accenture
SOURCES drives innovation to improve the way the world works and lives.
Visit us at www.accenture.com.
1. Accenture SME UK 2019 Survey

2. Accenture Research on European Commission data (Digital

Scoreboard key indicators)

3. CB Insights Global Fintech Report 2Q 2018

4. Accenture AI: Built to Scale study, November 2019

5. Financial News, Banks face spiraling costs from 50-year-old IT

6. Ovum (TMT Intelligence / Informa), January 2018

7. Accenture Research analysis on CB Insights data

8. Accenture 2018 Open Banking Survey

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