This interview with David Shinkins, Global Head of Cash Management Sales at Barclays Corporate Bank, looks at how global banks are approaching the changing world of corporate banking. David shares his views on several hot topics including fintech partnerships, virtual accounts, innovation in payments – including ISO20022, and open banking.

This interview is included as part of our corporate banking report, which you can read here.

What are some of the challenges you are addressing in the corporate banking space? 

DS: We are seeing demand for real-time access to banking through APIs, giving our clients alternative options for connectivity. This is to improve payment processing and more timely access to information (and better-informed decision-making). Ultimately, we want to give our clients connectivity options that suit their needs and business processes. This is all about making it easier for our clients to interact with us by enabling direct integration between their workflow tools (TMS, ERP, CRM, etc.) and the bank for core cash management functionalities.

What does the partnership ecosystem look like to your team? For example, do you work closely with external technology providers or Fintechs to obtain capabilities around innovation?

DS: There needs to be a balance in how we deliver solutions to our clients. The build, buy, or partner decision is a critical one in any delivery. However, the partnership approach has a strong ethos at Barclays, and we are very active in this space. This allows us to deliver innovative solutions that may not necessarily be core to us. We have several active partnership initiatives at the moment – some are still conceptual, some are in play, and some are live. It's also worth mentioning that we have a strong relationship with the Fintech sector and support many of them by providing access to accounts and banking services. We also have our Rise program, which supports early-stage Fintech start-ups with mentoring and office space. 

Are there any interesting use cases you can share around partnerships that have helped address some of these challenges? 

DS: We have partnered with a company called TransferMate to develop a solution that allows our clients to collect funds from their clients based in overseas locations. The solution is now live, and we have initially looked at universities in the UK that need to collect fees from overseas students. The service is promoted by the universities to their students, giving students a cost-effective and easy way to pay their fees locally and, at the same time, helping the universities to track and reconcile their receipts.

Enjoying the blog? You’ll love our report: How Corporate Banks can transform the Treasury.  

Barclays announced a project around Virtual Account management earlier in 2022. Why is this important to your clients? 

DS: Virtual accounts provide clients with greater visibility and control of their account structures, giving them the ability open/ close accounts themselves in real time. Virtual Accounts allows clients to segregate funds, allocate cash and reconcile payments more effectively. Ultimately it provides a way to centralize cash and liquidity management to support treasury concepts like In-House Banks or Shared Service Centers.  

Sub-entities under a parent entity can be created within a virtual structure. Each has its own addressable virtual accounts, and all are linked to a single physical account per currency. POBO/ROBO is made possible through the central treasury entity making and receiving all payments on behalf of the sub-entities. This achieves significant cost savings and operational efficiencies, lowering of bank account fees, self-service and automation for opening and managing bank accounts, and a far more efficient reconciliation process that lifts out a lot of manual exception processing. 

The payments space is seeing major transformation. What do you think will happen to payment technologies in the medium term?

DS: Certainly, it is an exciting time to be in payments. Change and innovation is happening all around. What we are seeing is a stronger emergence of instant and real-time payment schemes around the world, albeit domestically. It will be interesting to see if these domestic platforms can be linked together, creating interoperability.  

Open Banking is making big strides in payments, the use of Payment Initiation Services (PIS) is steadily growing, especially in the UK, and we can see more opportunities developing in this space. We're also seeing the convergence of functionalities of traditional payments and cards. Also, the use of Distributed Ledger Technology (DLT), Blockchain, and digital assets have the potential to increase the visibility and speed of payments and mitigate risks (e.g., in wholesale (Payment v Payment) and DvP (Delivery v Payment)) scenarios. There is also potential for cross-border payments, in real-time, with atomic settlement between parties. 

Alternative data is a major topic of interest in the retail banking space - do you see any applications of alternative data in the corporate banking cash management space as well?

DS: Alternative data can be used in the onboarding process of corporate clients. This can help with KYC processes, for example, understanding company and legal entity structures, identification of beneficial owners, etc. We also see the benefit of combining financial and non-financial data together, providing much richer information so clients can make better-informed decisions. As Open Banking moves more into the realms of Open Finance and, ultimately, Open Economy, data will prove to be integral to all new use cases that develop in this field. 

How big of a challenge is ISO 20022?

DS: Collecting information with the data owner's express permission, applying machine learning/AI analytics tools to it, and playing the findings back to clients in insightful ways will open the door to a wealth of new opportunities. ISO 20022 will, ultimately, simplify the entire landscape as all variations of legacy schema and formats will converge on a single, globally agreed standard. However, getting there will create significant challenges for all players. Take, for example, something as seemingly simple as the need to express a remitter or beneficiary address in a payment instruction.  

Many systems today will hold address details as a simple block of text or, at best, split it into basic lines: Address line 1, Address line 2, etc. But specific requirements may exceed that where the structure demands very specific data points to be isolated in specific tags. The migration burden should not be underestimated. 

What are the key trends to watch out for in the corporate cash management space? 

DS: As corporates strive for greater efficiency, they will look at automating simple and repetitive tasks. The use of APIs will continue to grow in value, giving clients real-time connectivity and direct integration into their TMS, ERP, CRM, etc... And when this is coupled with real-time payments and data, you create the perfect storm for opportunity.  

The use of data, both by banks and corporates, is also changing. Gone are the days when banks would just issue a vanilla bank statement. Corporates will expect greater insights from the data they hold, both internally and externally. 

For more information on the changing face of corproate banking, check out our report, How Corporate Banks can transform the Treasury. The interview with David was carried out by Burnmark on behalf of 10x.