As bloggers we like to talk about mobile banking and social media and how that will change the way we bank in the future. As exciting as that is, there is a lot of value in banks pursuing core banking innovation projects. I heard a great quote on that today: “Mobile, cloud, social get hype, but core projects to build capabilities get IT dollars” (h/t to Matthew Josefowicz at Novarica for that.) From a project funding perspective, it is often the projects that can show a real return that banks pursue, and one area that is picking up in that regard is pricing and billing projects on the wholesale or corporate side of banking. 

The challenges presented by core processing systems can and do lead to revenue leakage. TowerGroup has noted that the cost of poor data alone can amount to $70 million in revenue leakage per billion of revenues (annually!) In the face of clients who demand to be treated as more inherently valuable banks are forced to create manual workarounds (patches and build-ons or sometimes even excel spreadsheets) or else replace or renovate these core systems.

Based on the type and quality of service that corporate clients expect banks need to be able to package and bundle banking products on a client by client basis. That’s one half of the equation – but the other half is how do you price that kind of bespoke customization? Ideally your core system can measure the relationship value and provide a price quote that profits both parties. If it can’t, then we’re back to workarounds and spreadsheets.

Beyond that there is the issue of invoice standardization. Multinational corporations today expect a certain standard with respect to how they are presented with their banking activities and fees charged. They generally don’t want to have to sift through invoices in different formats – they want a single view of their accounts. They want to know where they stand and what they are paying for and why.

Banks should not rely on the longevity of existing relationships to predict future business. In the same report it was noted that over 50% of corporate clients surveyed would be interested in switching banks based on better account management capabilities or better customer service. These days banks need to earn their loyalty. 

With data like that, centralized pricing and billing systems are quickly becoming a strategic imperative in corporate banking. An enterprise billing system can reduce revenue leakage and increase efficiency in billing systems leading to further cost savings. In the short term, as more banks implement these pricing and billing systems, the risks will shift to those banks who find it difficult to quickly respond to the changing needs of corporate banking clients. 

To learn more about how this can be done, we’re hosting a webinar on March 21st at 10 am EST. One of our clients, SEB, will tell us about their journey in implementing an enterprise billing function. Join us and learn first-hand about the challenges they overcome and the ROI they achieved.