THE POWER OF MANY: CORPORATE BANKING IN AN ECOSYSTEM WORLD - AUGUST 2019 - MCKINSEY
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The power of many: Corporate banking in an ecosystem world August 2019
Authors and acknowledgements Akash Lal Senior Partner Mumbai Daniele Chiarella Senior Partner London Feng Han Partner Shanghai Giulio Romanelli Partner Sydney Markus Röhrig Partner Munich Vincent Zheng Associate Partner Beijing Xing Liu Consultant Beijing The authors would like to acknowledge the contributions of Roger Rudisuli, Kevin Buehler, Jacob Dahl, Joe Ngai, John Qu, Andras Havas, Istvan Rab, Fumiaki Katsuki, and Shinichiro Oda to this report.
The power of many:
Corporate banking in
an ecosystem world
Corporate banking is being transformed by digitization. From
core business processes to the way that clients engage and
transact, digital has become the sine qua non of almost every
action. However, digitization is still in the early stages in corporate
banking. As it matures, more fundamental changes will ensue,
enabled by the free flow of data between banks, their clients,
and third parties. The resulting “ecosystems” will catalyze new
operating models and disruption on an unprecedented scale.
Already, tech giants such as Alibaba, Tencent, strategies, talent, and IT to do so. They need to
and Amazon operate ecosystems with multiple identify potential partners, and determine which
businesses. Some already offer financial services, business models work best for them. The task is
from trade finance, to payments and marketplace nuanced and complex, but in a world of increasing
lending. The implication of these changes is that the competition, it represents an opportunity that
traditional boundaries between corporate banks cannot be ignored.
and the industries they serve can no longer be taken
for granted. In an ecosystem context, information, Corporate banking’s performance
resources, and expertise have coalesced; everything challenge
is up for grabs.
Corporate banking plays a vital role in the wider
Banks in China are already getting involved, with a industry’s performance, accounting for around
range of adoption models emerging, from fintech- one third of total revenues.¹ However, the segment
based platforms, to marketplace ecosystems and has come under pressure in recent years, amid
partnerships with large companies. European and intensifying competition, technology, innovation,
US banks are also taking steps, with some investing and weak performance in some markets.
heavily in fintechs and application programming
Revenue growth has averaged around 5 percent
interfaces (APIs).
since 2009 and average return on equity reached
The benefits of joining ecosystems include 9 percent in 2016. These healthy top-line numbers
expansion into new geographies, markets and disguise concerning underlying dynamics. The vast
products, added value from sharing of intelligence, majority of positive performance has come from
and in some cases technology, and more effective emerging markets, particularly in Latin America
risk mitigation—partly the result of enhanced access and Asia, while Western Europe has seen return on
to data across the network. equity fall far below its cost. There is also significant
variance within regions, with leading banks
Incumbents have first-mover advantage, but to
accounting for the lion’s share of value creation,
thrive in an ecosystem world they must choose
while the rest tread water or lose money.
the role they want to play, and develop the right
1
We define corporate banking as banking services provided from a variety of financial institutions to companies with more than $100 million in
revenues and their subsidiares, as well as similar companies that participate in ecosystems.
The power of many: Corporate banking in an ecosystem world 1A particular concern for corporate banking executives may no longer be as attached to the idea
executives is that they have operated over that banks are the only source of financial services.
recent years in a “goldilocks” macroeconomic It is easy to imagine a situation in which other
environment—neither too hot, nor too cold—and industries (particularly in the tech space) may have
aided by almost limitless cheap money from central the customer relationships, financial firepower, and
banks. Of course, this is unlikely to last. The financial strategic intent to compete.
cycle will turn, bringing higher interest rates and a
These trends matter to the banking industry
normalization of credit conditions and risk costs.
because the corporate segment remains key to
The effects of the latter are already manifest in
the health of the wider industry. Corporate-related
some emerging markets. In China, in particular, risk
banking activity generated around $1.25 trillion in
costs have risen sharply, driven by nonperforming
revenues in 2016. Slower growth, more regulation,
loans and unsustainable corporate leverage.
rising competition, and the critical emergence of
A further pressure is regulation, the roll-out of which ecosystems put that revenue pool in play.
is set to continue at pace over the coming years.
Banks under the Basel framework must persist in
building out their capital buffers, implementing new
Ecosystems will change everything
risk measures, and taking steps to ensure they hold Individual digital technologies offer convenience
sufficient liquid assets. From 2019, the Financial and the ability to work more efficiently and serve
Accounting Standards Board’s Current Expected customers better. However, the whole is greater
Credit Loss Model will impose much higher impaired than the sum of its parts. The most successful
loan provisions on US banks. The alternative businesses have grasped how digitization enables
International Financial Reporting Standard 9 will diversification; that if you can sell books on your
lead to an increase in realized earnings volatility. platform then you can also sell cars, holidays, and
Banks in Europe must also manage the impact of financial services. Companies such as Alibaba,
regulation aimed at fueling competition (Europe’s Facebook, and Tencent have evolved into multi-
PSD2, the UK’s Open Banking initiative) and new business behemoths, or ecosystems, that bring
rules to boost transparency under the Markets in together interconnected services to meet a variety
Financial Instruments Directive. By our estimate, of needs in a single integrated experience.
global regulation in aggregate has the potential to
McKinsey estimates that in the next ten years
depress average industry ROEs to a low of 3 percent
ecosystems will replace numerous value chains
before mitigation over the coming years.
globally. We believe that by the mid-2020s they will
Finally, corporate banks face competitive account for $60 trillion in revenues and span 30
headwinds. Fintechs are targeting attractive percent or more of global gross economic output.
links in the value chain, including payments, cash
In banking, ecosystems offer the opportunity for
management, asset financing, and trade finance.
providers to tap into new customers, markets, and
While companies such as ThinCats, Creditshelf,
data, leading to the potential for greater scale and
and LendingClub are making a mark in the small
more complete resources for managing risk. They
and medium size enterprise (SME) lending space,
are already making waves in the retail segment,
different platforms are already eating away at the
where open-banking initiatives are encouraging
corporate business. For instance, FX platforms
third parties to get involved. Ecosystem plays are
such as T360 and FXall and payments providers like
now also starting to appear in corporate banking,
Ripple are taking away the corporate business. A
with companies, finance providers, incumbents,
tough competitive environment is only going to get
and technology providers exploring how they can
more challenging in the years ahead.
achieve critical mass under a single digital umbrella.
As the market and economic environment
Ecosystems are likely to thrive in the corporate
shifts, corporate banks are also under rising
context because there are clear potential benefits
pressure to offer faster, more efficient, and more
for both clients and providers:
connected services, in line with the trends in retail
banking. Clients increasingly expect streamlined —— A single gateway means clients get frictionless
experiences, integrated solutions, and value- access to a broader range of products and
added services. In addition, as digital disruption services than through a conventional linear
softens the borders between industries, corporate relationship.
2 The power of many: Corporate banking in an ecosystem world—— P
artnerships and service integration between data that becomes available.
companies across sectors create the potential
Still, alongside the many opportunities, there are
for innovation, cross-selling, and data-sharing,
also risks. McKinsey research shows that while
as well as the opportunity to develop new
digital technology propels some companies to
business models and value-added services.
become clear market winners, it depletes corporate
—— Ecosystems create an opportunity to earnings and overall value for others. More players
expand into new territories (geographic and naturally increase competition and the threat of
client segment), broaden ranges of products disintermediation. There is a well-rehearsed concern
and services, and overcome the capability among bankers that new technology gateways
constraints inherent to being an individual player. could create a barrier between themselves and
their clients, with other players controlling the
—— M
ore effective risk mitigation is enabled by
relationship. That way lies a utility model that is
multi-dimensional data and information available
unlikely to be an attractive end game. In addition,
in the ecosystem. Orders, transaction data,
data sharing is itself a double-edged sword, creating
logistics, and other information from partners
business opportunities but also offering competitors
such as tax bureaus and customs will support
the chance to create value from formerly proprietary
credit facility and post-loan management.
assets. Finally, there is inherent risk in sharing
A particular benefit for corporate banks is the data with third parties, particularly as banks come
chance to partner with organizations outside under rising regulatory imperatives to protect
banking. For example, companies, banks, and their customers.
securities houses on a single platform can leverage
scale to put together cheaper and more accessible
financing packages (Exhibit 1). Ecosystems may
China taking the lead
also bring technology-based opportunities, such Local regulation, culture, and business practices
as easier data-sharing, and better information mean the development of ecosystems is likely to
exchange across the front, middle, and back offices. proceed at different paces around the world. To
There are also potential operational improvements. date the biggest businesses have evolved in China.
Risk management and credit assessment, for E-commerce giant Alibaba, for example, offers
example, may be better served with the additional numerous financial and other services to companies
Exhibit 1
Ecosystems create opportunities for banks and enable better services.
Three key benefits
Cater to diverse Clients can access a more comprehensive range of products and services
needs and address
Partner with numerous players across sectors, including banks, non-bank financial institutions,
more pain points
fintechs, enterprises, and professional services firms, to offer integrated solutions
Tap into new client Enable regional players to bring innovative solutions to new geographies and client segments
segments and
Enable new business models such as integrated supply-chain solutions based on core enterprise’s
geographies
credit
Accelerate business expansion for regional players leveraging the ecosystem’s nationwide online
platform
Enhance risk Leverage data from real transactions to enhance risk management
controls
Host-to-host transaction data to validate real trade background and support credit facility as well as
post-loan management
Source: McKinsey analysis
The power of many: Corporate banking in an ecosystem world 3on its platform. Social media platform Tencent and document management. The distributed
has launched a bank that leverages data from ledger forms a tamper-proof “golden record”
platform partners to make loans. Another Chinese of transactions in negotiable debt certificates.
ecosystem, Ant Financial (founded in 2014 out of the Financial companies on the platform include
world’s biggest online payments provider Alipay—a banks, trust funds, securities firms, and factoring
subsidiary of Alibaba) runs a money-market fund companies. Core enterprises receive credit lines
with $165 billion of assets under management. that can be extended down the supply chain. In
bringing together a group of enterprises, Linklogis
The common theme running through these
increases collective bargaining power and boosts
businesses is that they are sustained because
the stability of supply chains.
they create a hive effect in which mutual benefits
accumulate. For the most part they are orientated • The banking arm of Ping An Insurance, China’s
toward the retail space and mass market. However, second-largest life insurer, is leveraging a range
that is beginning to change, and a variety of new of technologies (blockchain, AI, cloud computing)
models are emerging that are directly relevant to to expand its retail-focused ecosystem and build
corporate banking propositions: a supply-chain accounts-receivable platform
(Exhibit 2). The platform aims to bring together core
Fintech or bank-led ecosystems companies, their suppliers, factoring interests,
securities firms, trust companies, and related
•L
inklogis (backed by Tencent) is a fintech startup
businesses to enable asset-based financing. The
that helps banks build blockchain-based platforms
resulting network supports securitization and trading
on which core enterprises and their supply chains
opportunities, and financing can be extended
can access asset-based finance. Blockchain
through the supply chain to second-order suppliers
technology supports identity checks, asset review,
and potentially beyond, according to Ping An.
Exhibit 2
Ping An’s SAS platform helps corporates and value-chain players obtain financing
and value-added services.
Blockchain Artificial
New technologies as enablers Inteligence
Information
tracing and validation Identity verification
Factoring asset securitization
and exchange
Securities companies Private equity
Trust funds
Accounts/receivable financing based on credit of
core enterprises
Core companies Immediate suppliers Upstream suppliers
Leasing companies Factoring companies
Banks
Cloud storage Automatic registration
New technologies as enablers on People’s Bank of
Cloud-based China system
platform
Fraud prevention
Source: Ping An annual report; expert interviews
4 The power of many: Corporate banking in an ecosystem worldIndustrial enterprise + big bank Marketplace ecosystem
ecosystem The marketplace model enables a bank to
A group of 11 industrial companies, including rolling partner with cross-sector players to discover new
stock manufacturer CRRC and China Aerospace relationships and expand (Exhibit 4). A leading
Science and Technology Corporation, partnered regional bank is working with banks, non-bank
with two state-owned banks (ICBC and PSBC), six financial institutions, factoring companies, core
local state-owned enterprises, and four privately enterprises, and technology companies to build a
owned enterprises, to build a trade-finance platform. platform that enables participants from within and
The CSCC platform (Exhibit 3) includes more than outside the region to access trade finance, asset
900 core companies, roughly 35,000 multi-layer exchange, payments, and value-added services.
value-chain players, and over 20 national and The bank gains from cooperation with the factoring
regional banks and non-bank financial institutions. companies and by building alliances with other
Transaction volume reached approximately RMB financial institutions. The relationships on the
240 billion by 2019, according to CSCC’s web site. platform are designed to be mutually beneficial;
banks obtain high-quality credit assets, factoring
The platform incorporates multiple business
companies source new business, and corporates
models, including financing, client brokerage
access a wider choice of financing options.
services, and IT solutions to help banks build or
The plan is to expand the platform and to grow
white-label platforms. It also offers services such as
interbank sharing to include activities such as data
order and invoice reconciliation and documentary
exchange for onboarding and know your customer
servicing.Companies on the platform can access
(KYC). During the course of the project, the bank
value-chain financing on a T+0 timeline based on a
transformed its customer-facing and IT systems. It
range of assets.
Exhibit 3
CSCC’s trade finance ecosystem incorporates a range of models.
Multiplayer platform
Company ~ RMB 240 billion in transaction volume by 2019
Leading banks
E-bill payments Non-bank FIs
Core companies 1st-tier supplier
Core companies, multi-layer
Over 900 core ~ 35,000+ accounts value-chain players
companies
across China Split and
endorse
Client Various business models:
brokerage 2nd- and 3rd-tier Multi-layer value-chain
by the platform suppliers financing based on core
companies’ e-bill payments
Financing Asset-backed security
Client brokerage service to
Asset exchange banks onboard
Financial
institution Banking partners Non-bank IT solution to help banks
financial institutions build or white-label
platforms
Over 30 national Factoring companies Value-added document
and regional banks service
such as ICBC ABS
exchange Leasing companies
Leasing companies
Source: CSCC website
The power of many: Corporate banking in an ecosystem world 5set up a digital innovation garage, bringing together services, business models, and technologies
teams from business, IT, and operations. available, compared with traditional platforms.
The scale and diversity create significant
Regulator + banks + fintech ecosystem opportunities for lenders, borrowers, and providers
A partnership between China’s central bank of adjacent services (Exhibit 6).
(PBOC), Standard Chartered Bank, automaker
BYD, and Ping An (as technology provider) created Banks outside China are innovating
the China Bay Area Trade Finance Blockchain Regulation such as Europe’s Payment Services
Platform (Exhibit 5). Stakeholders include the Directive (PSD2) and the UK’s open banking
Bank of China, China Construction Bank, and initiative provide a productive medium for the
China Merchants Bank. The aim of the project is to cultivation of ecosystems. Both initiatives aim to
enable participants, and SMEs, to access financing open up bank databases to third parties through
and services including logistics, customs, and tax APIs. Participants are likely to benefit from
advisory. Proposed benefits include lower interest shared data, wider client reach, more numerous
rates and much faster loan approvals—20 minutes touchpoints, and the opportunity to offer better
compared with weeks previously. Orders, logistics, customer experiences. Banks in the United States
and transaction data are stored on the blockchain are also experimenting. Citi, for example, has
ledger, which was launched for testing in September launched treasury and trade solution APIs through
2018. The platform is also designed to connect its integration platform. The solutions enable
with the Internet of Things to enable automated corporate clients to make payments instantly and
contract execution. access real-time information on FX, accounts, direct
debits, cut-off times, and payments.
Ecosystems are a game-changer in supply-chain
finance, because of the much larger range of
Exhibit 4
Marketplace ecosystems enable geographic expansion and create new business models and
sources of finance.
Marketplace ecosystem
Suppliers Distributors Business expansion
Accounts 1
1
Accounts receivable
Leveraging quasi-FIs:
payable 3
Non-bank FIs factoring companies as
Core corporates partners, enabling regional
Factoring company banks to extend client
coverage
Leasing company
High-quality
Supply chain company Various funding partners
asset 2
exchange Partner banks to join the
ecosystem
Trust companies, securities
companies
2
Banks Bundling core enterprises
3
Holistic industry supply
chain finance: stabilize the
Banking alliance Interbank cooperation Fintech partnership chain, optimize financials
and accelerate turnover
cycles
Reginal banking participants
Source: McKinsey analysis
6 The power of many: Corporate banking in an ecosystem worldA common dynamic across these initiatives is that are leveraging APIs to open data and services
banks are seeking partnerships that can help them to third parties. In one example, BBVA allows
innovate, expand, control costs, and accelerate time third parties to retrieve business user balances
to market. In the process, three distinct species of and transactions in market-standard format.
nascent ecosystem are emerging: CitiConnect has processed millions of API calls
for payment initiation and data inquiries. APIs
—— I nvestment and M&A in fintech. Bigger banks
connect ecosystem partners, organizations,
are investing in fintechs that can help them
and clients seamlessly, enabling the integration
incorporate new technology and develop use
of capabilities and offering of new products
cases. Almost all major banks have taken this
and services across ecosystems. The future of
approach in some form. In one example, Westpac
corporate banking is likely to be characterized
strategically invests in around 20 fintechs, some
by ecosystem-like interactions, enabled by APIs
of which it has integrated into its business. In
and platforms built by clients, banks, and third-
another, Bocom International, the investment
party providers. Potential API use cases exist
banking arm of China’s Bank of Communications,
in areas such as trade finance, cross-border
has partnered with Hong Kong fintech firm FDT-
payments, transaction monitoring, and corporate
AI to develop solutions from artificial intelligence
lending (for example, syndicated loans and
and big data.
credit scoring).
—— B
anking-as-a-service platform (open banking
API). Banks including BBVA, Citi, and DBS,
Exhibit 5
People’s Bank of China coordinated a new platform leveraging blockchain technology to
improve capital efficiency and enable financing.
In September 2018, China Bay Area Trade Finance Blockchain Platform,
coordinated by PBOC, ran a Phase I trial for accounts-receivable financing
Highlights:
Open and Blockchain endorsed
scalable Greatly enhanced
platform for Headlight Order sheet Automaker credibility and
financial supplier A (anchor authenticity;
institutions (upstream Shipment company) decentralized, traceable,
and SME) tamper-free
companies Logistics Order
information information Efficiency improvement
A reserved
data interface 2-3 20
for customs, weeks mins
China Bay Area
regulatory, tax
Loan
Trade Finance
Loan
Block-chain
t
ymen
ion
applic
More Platform
nticat
Before After
exten
information to
AR pa
ation
enhance a
Authe
sion
higher number
of use cases Bank transfer Lower-cost financing
information
7-8% 5.5-6%
Bank’s funding
Before After
Source: McKinsey analysis
The power of many: Corporate banking in an ecosystem world 7Exhibit 6
Ecosystems create significant opportunities for lenders, borrowers and providers of adjacent
services.
Ecosystem platform versus Traditional supply-chain finance
Players Broader types of market players Mainly trilateral parties
All membership banks Only the operating bank
Multiple corporates Single corporate
Multiple layers of suppliers and distributors Immediate suppliers and distributors
Factoring companies
Securities
Trust companies
Solutions Various banking solutions and Only two major solutions
value-added services Supplier finance
Extended financing by “e-draft” circulation Distributor finance
Factoring ABS exchange
Supplier finance
Distributor finance
Business Membership-based trading platform Supply-chain finance
model Asset marketplace and exchange
Client brokerage
IT solution service
Tech Blockchain Internet
enabler Distant/shared KYC recognition
Internet
Source: McKinsey analysis
—— Strategic alliances. Banks are creating informal Ecosystems create an opportunity for corporate
or formal partnerships to share knowledge and banks to expand into new territories and client
best practices. Rabobank, for example, formed segments, launch more products and services, and
an alliance with banks in around 40 countries, as overcome the capability constraints inherent to
well as NGOs and research institutes, aiming to being an individual player. In accounts receivable
expand its network in the agriculture industry. trade finance in China alone, the market has grown
at 10 percent a year over recent years to pass RMB
What’s next? 14 trillion (Exhibit 7).
Banking industry executives are attuned to the As executives consider how to position their
need to manage the challenges of economic companies, they first need to consider their own
uncertainty, and are preparing for the rise in risk market positions, priorities, and levels of ambition.
margins that will likely accompany any cyclical However, there are also rules of thumb that can
downturn. The industry is making efforts to become help guide the choices they make. Larger banks,
leaner and more robust, and many large banks have for example, can leverage their resources to build
partnered with fintechs to develop and expand their ecosystems through accelerated investment
services. However, only a few have formulated a in fintechs. Regional players are often more
comprehensive strategy for the innovation that is constrained, but have much to gain from working
fueling the growth of ecosystems. closely with peers, clients, and partners. In doing
8 The power of many: Corporate banking in an ecosystem worldso they can reasonably expect to reap benefits of —— Identify your role. Banks must decide how they
scale that include greater client reach, enriched want to play. For some, it might make sense to
products, and enhanced services. However, the task orchestrate an ecosystem, taking the lead in
is complex, and requires a strong sense of mission, bringing the elements together and controlling
as well as budget and technological resources. the point of entry. Alternatively, a bank could
join other ecosystems, accessing scale much
McKinsey sees five key actions that may help
faster and gaining access to new industries and
corporate banks find the right path:
businesses. One leading US bank has invested
—— S
tart from the top. Commitment from the CEO billions of dollars in building relationships with
and board is essential. However, this must go hundreds of fintechs, including online brokers,
beyond high-level mission statements. There payments providers, and marketplace lenders.
must be ongoing conversations between top Banks must align their roles to their strategic
decision-makers and those leading ecosystem positioning, product focus, and market.
initiatives. Areas such as data science are
—— Create win-win synergies. In successful
relatively new and require investment of time and
ecosystems, every member benefits from the
resources. It may be useful to set up workshops,
involvement of other members. Banks must
where directors can ask questions and deepen
identify win-win value propositions and clear
their understanding. External experts can
incentives for their clients and partners. Every
also play a role, bringing different skill sets to
company that takes part needs to contribute. In
enrichen the ecosystem mindset. Banks must
assessing partnership candidates, leaders might
combine technological expertise with business-
consider industries that are changing fast and
process knowledge and strength in risk and
which offer new sources of value, or are most
regulation. Finally, the bank’s data strategy
meaningful in terms of client base. Executives
must be connected to its business goals and
may consider how they can leverage their own
core operations, so the proposition creates
data to benefit themselves and others, and how
excitement through the organization.
Exhibit 7
The market for trade finance ecosystems in China is an estimated RMB 14 trillion.
Industrial companies accounts receivables volume
RMB trillion
+10% p.a.
14.3
13.5
12.6 The large marketplace
11.5 attracts innovators
and first movers such
as CSCC Finance, the
trade finance
ecosystem built by a
group of leading
6.5 state-owned
enterprises and
partner banks.
2010 2015 2016 2017 2018
Source: Wind
The power of many: Corporate banking in an ecosystem world 9that will impact internal roles, operating models, data diversity—achieved in part through
and business goals. partnerships—which will enable tailored services
and create more value for the ecosystem
—— Define use cases. Banking executives must
as a whole. Information from a shipping
identify the areas early on where they can
company, for example, may help banks market
generate the most value for themselves and
trade-finance and FX services. Deeper data
their clients. In some regions that may be in
insights can establish previously undetected
trade finance, while in others it may be corporate
connections between companies, people, and
lending or data-driven applications. The
relationships. More extensive data can also
ecosystems with strong early growth in China are
support analytically driven scenario planning,
the trade-finance platforms that bring together
helping banks understand how ecosystems may
industrial enterprises, national and regional
develop, and where data can add value. Still,
banks, and financial institutions. Potential API
banks may not wish to share everything—there
use cases are also emerging in trade finance,
must be policies about what should remain
cross-border payments, transaction monitoring
private. Equally, they must ensure that partners
including anti-money laundering and KYC, and
share back any proprietary information they
corporate lending.
have transformed or enriched. Banks should
—— Get the IT and data right. The lifeblood of any ask whether there is some target end state
commercial ecosystem is a digital platform for data management that will drive value
and data. This will feed cross-fertilization and creation. Technology is an important enabler,
enable new insights, more accurate pricing, with cloud-based databases proliferating and
and innovative services. A critical goal is AI applications including natural language
Exhibit 8
Banks can choose one or multiple models depending on product area and market segment.
Products (financial and beyond)
Both own
Own and third party Third party
Traditional banks
1 offer principally their own
1 4 5 products through their own
channels
Traditional Solution Aggregator/ “All things to all people”
Own bank provider solution 2 model prioritizes own
manager products but creates
competition on distribution
Channels Ecosystem orchestrators
3 facilitate collaboration
(branches, between multiple
e-bank, participants
apps, etc)
2 3 Solution providers
4 create end-to-end solutions
“All things to Ecosystem by combining best-of-breed
Both own all people” orchestrator products, either their own or
and third from a third party
party
Aggregators and solution
5 managers
create transparency and
promote competition
Source: McKinsey analysis
10 The power of many: Corporate banking in an ecosystem worldprocessing, deep learning and neural networks banking. These players understand that in a fast-
increasingly available to help banks achieve new moving and increasingly competitive environment
insights. Banks must also be willing to review the whole is greater than the sum of its parts.
data and application architecture, and to invest Ecosystems enable expansion, innovation, data-
and build new capabilities in APIs that will enable sharing, and new business opportunities. Regional
external connections. players may benefit in particular from extended
reach and scale. Given the range of possibilities,
Corporate banks are specialized providers of
and the chance to create critical mass, ecosystems
sometimes complex financial services, and are
are likely to be a key disruptive threat to corporate
therefore relatively protected from the huge
banking over the coming decade. If banks are to
ecosystems that are emerging in the retail context.
catch the wave, the time for action is now.
However, it would be a mistake for executives to
think they are immune. Already in China corporate
banks are taking part in ecosystems in a variety of
models. Large European and US-based banks are
also engaging, primarily through partnerships with
fintechs and exploration of the implications of open
The power of many: Corporate banking in an ecosystem world 11August 2019 Copyright © McKinsey & Company www.mckinsey.com/industries/ financial-services/our-insights @McKBanking
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