Corporate Banking: Transformation is central to achieving strategic priorities

Major transformation is going to be a key theme for corporate banks around the world, across practically every facet of their strategies and operating models. That is according to a study from Horvath, which surveyed banking executives and managers from different business areas.

Change is the only constant, as the old proverb goes. And as the world continues to grapple with major changes, so too does the financial services industry. In order to stay on top of all the social, economic, and technological changes, corporate banks need to place transformation at the core of business and operating model.

According to the Horvath report, European corporate banking is at a strategic turning point. Economic output is stagnating, investments and margins are under pressure, and potential growth is limited. Add stubborn geopolitical risks, regulatory pressures, and interest rate volatility to the mix and the result is clear: those that are best able to adapt will be the ones to succeed.

Finding solutions

AI has emerged as the most important strategic priority for banks going forward. It represents the largest gap between the current maturity level and the general ambitions up to 2030.

Another area of focus is data analytics, which goes hand-in-hand with AI adoption. AI-powered tools that process a company’s data are only as good as the data they can harness. Banks will be looking to structure their data and store it appropriately, avoiding siloed data and moving away from legacy systems that render valuable data unavailable.

End-to-end (E2E) digitalization is seen as another crucial area for corporate banking with a large gap between the current status quo and future goals. E2E transformation includes things like integrating payment processing seamlessly across all channels and providing a unified digital interface for all client interactions.

Corporate banking also has ambitious 2030 targets for digital and personal customer experience (CX). Bettering CX is a huge part of modern banking, which has generally made an enormous shift to digital. But while the digital experience is very important for an improved CX, maintaining a personal touch will remain important.

For example, as chatbots become the norm in customer service departments, users often get frustrated when they are not able to speak directly with a human representative. A total of 72% of respondents believe personalization in financial services is very important, according to Horvath’s survey.

Setting the right priorities

It is clear that corporate banks need to make big decisions as the landscape changes – but the researchers stress that leaders should avoid trying to do it all at once. In this regard, setting priorities is an important part of getting transformation right.

While some of the trends mentioned in the report like digital E2E processes and dynamic risk management are seen as unique selling propositions (USP), others are seen as pivotal ‘game changers’. AI and the closely related issue of bullet-proof data analytics are seen as game changers.

It may be wise for banks to prioritize the more high impact trends before taking on the ‘nice-to-have’ changes like open banking or flexible pricing. The disruptive technologies that many banks are tapping into are far more likely to give their businesses a competitive edge.

But there is no one-size-fits-all approach to addressing these emerging trends. For example, the various different areas of transformation have variable impacts in different segments – whether SMEs, mid caps, or corporates – due to differing customer needs and business models.

Resilience in the face of change

The current state of corporate banking in Europe shows considerable resilience. European banks were largely successful in weathering the storm of global conflict and economic uncertainty, with unexpectedly strong earnings in the first quarter of 2025.

European banks managed to pull off a strong start to this year thanks, in part, to stable credit quality, robust fee income, and resilient net interest income. But continuing on a strong trajectory will require keeping up with the competition.

Indeed, there are still a lot of challenges for corporate banks, like managing the growing complexity of EU regulatory frameworks: The Basel III and IV Accords, for instance, which aim to boost resilience in banking in order to avoid another crisis like the one that ravaged the global economic order in 2008.

There is also growing concern over the continued rise of cybersecurity risks, as many banks struggle with bridging the gap between new digital systems and legacy systems. And when it comes to AI, there are also clearly a lot of opportunities for banks to further leverage and data analytics, but there are also lingering concerns over security, privacy, inaccuracies, and potential bias.

“Corporate banking will not remain unaffected by the latest social, economic, and technological upheavals,” said Ingo Kipker, managing partner at Horvath.

“Markets, customer behavior, business models, and production conditions are undergoing profound changes, which banks must actively face up to. The ability to react strategically, structurally, and culturally to these changes is becoming a decisive success factor in securing competitiveness and financial prosperity in the corporate client business. This requires banks to not only have a holistic view of their business model, but also a clear plan for fundamental renewal. We call this corporate transformation.”