Would you like data with that?

Read time: 5 mins Added date: 30/01/2024

Sarah Saigol, Managing Director, Head of Cash Management & Payments Solutions, gives her thoughts on how the days of services being solely about facilitating credit and guarantees are long gone.

Why ‘good’ corporate banking is now far more than just the money

Today, a bank's ability to add value through their proprietary data and insight – helping management teams make smarter, more informed, decisions – is what is making good financing relationships great.

Here’s what is driving this trend, the benefits it’s unlocking and how I see it evolving in the years ahead.

Under the skin

In the corporate world, competitive advantages can be won and lost on the strength, granularity, and accessibility of the information that businesses possess – from insights on customer behaviour, to data on shop or production facilities’ performance. It’s fair to say that becoming more data-driven is a strategic objective for many corporates and it’s absolutely right to think of data as a fuel that powers boardroom decision making and corporate performance.

As a result, companies around the world are becoming more data-driven and are actively seeking partners who can help them gain richer, deeper insight, faster. Major financial institutions, by virtue of their market positions and services, are often the custodians of significant amounts of data, possessing a real-time, front-row seat on consumer trends and economic performance.

There’s a significant opportunity here for banks with the right capabilities, reach and expertise to support. Provided that banks have invested in the right technology and the processes to analyse this information in a safe, secure, compliant, and ethical way, they have incredibly powerful insight that can be offered as a service to their clients. Ultimately, this helps corporates do business better, benefitting not only them, but also their customers and their wider economies.

Insight in practice

What does this ‘insight-adding’ look like in practice? The possibilities are only really constrained by a business’ specific needs and the strength of the data available. To start with, it can deliver macro insights. The real-time nature of the data can help paint a picture of consumer demand across customer segments, enable businesses to respond to a changing environment faster and adapt their products and services.

In terms of scale, it covers the same territory as macroeconomic data sets published by third-party analysts or government statisticians. And, due to it being a by-product of live consumer activity in the market, data from a banking partner can actually deliver a more representative and up-to-the minute picture of what’s going on in the market.

It can also deliver granular bespoke business-specific insights, such as helping businesses unlock powerful market benchmarking. Organisations can benefit from an analysis of key business metrics such as average card transaction value to see how people are spending on competing or similar products across their market and across the country, in turn enabling them to respond with competitive actions.

For example, a client using Lloyds Bank’s anonymised and aggregated insight was able to do just this and identify the demographic segments in which they were losing share to their peers. This information enabled them to implement a strategy to defend their position to retain and win back customers.

It could also help optimise business’ omnichannel strategies. Investment into both physical and digital shopfronts can be costly, but highly rewarding if executed well. Data from a banking partner can help provide even more analytical firepower on which channels are performing the best, and help management teams make better, more informed decisions.

For example, we have worked with several clients to help them understand the scale of the opportunity for opening new bricks-and-mortar stores – analysing their existing store footprint, online sales and the intensity of local competition to provide an indication of opportunity and to flag the extent to which they may be at risk of cannibalising their own operations.

Looking to the future

We’re starting to see financial institutions provide data services as part of their corporate banking offering, and it’s going to shape the market. The ability for a banking partner to bring the data element to the table is going to be more and more important in corporate banking relationships and become a competitive differentiator.

At Lloyds Bank, we’re in a strong position to responsibly support our corporate clients with all of these kinds of insights, helping businesses deliver better for their customers. We process one in four consumer transactions across the UK, making us one of the largest custodians of data in the country.

Our significant investments in technology, including AI-powered analytics tools, coupled with our ‘privacy by design’ approach means we can aggregate and anonymise this information to support organisations, large or small, with insight on everything from location-specific targets, to the wider economy. We offer this on demand through a client-facing portal and provide bespoke, timely feeds as a service so that management teams can make decisions when they need to instead of waiting for official statistics or using survey data that shows intentions rather than facts.

As I see it, data’s growing role in what makes ‘good’ corporate banking won’t only mean ever-closer relationships between banks and businesses. It will also help corporates assemble more detailed, more actionable, pictures from what have hitherto been scattered, disparate points of information – to everyone’s benefit.