Corporate Banking – Services, Clientele, Products & Pricing

Corporate banking represents a plethora of banking and financial services provided for domestic and international operations of big local corporates and to the local operations of multinational organizations.

Corporate banking refers to banking products and services that are offered especially to corporate clients such as lending services that could be in the form of a secured or unsecured loan, financing, underwriting, cash management, issuing of stocks and bonds, etc.

Corporate Banking Services

Services of corporate banking are as follows:

• Providing access to commercial banking products, including facilities for working capital like domestic and international trade operations and funding
• Channel financing and overdrafts,
• Letters of guarantee
• Structured solutions for both onshore and offshore operations of organizations
• Term loans
• Domestic and international payments
• Providing Support to client’s international operations, ensuring full consideration of the company’s business and financial needs.

Corporate Clientele

Banks may categorize their corporate clienteles into three sections on the basis of capital invested and the sales volume:

• Large corporations,
• Mid-size companies, and Small
• Medium business Enterprises (SMEs).

Corporate customers can be further segmented into verticals of the industry, such as automobiles, aviation, tourism, etc. Banks develop lasting relationships with their corporate customers as a part of their promotion efforts. In a market so full of competition, building strong relationships with the clients help to retain customers and increase profitability.

The communications and associations between the banks and their corporate clients are influenced by three factors

• the external environment
• the outcome of the interactions
• and the interaction process.

The ‘Partnership Relationship Lifecycle Model’ describes the evolution of the bank-corporate customer relationship, beginning at an early stage where a ‘customer’ shows interest in the bank’s offerings, and growing to become a mutually beneficial ‘partnership relationship’ between the client and the bank.

Corporate Banking Products and Pricing

Banks need to constantly deal with the evolving requirements of their clients through better product development. However, financial products can be easily replicated. The pricing of these banking products has a direct influence on customer acquirement and their retention, in addition to profitability and sustainability.

The pricing is influenced by many factors such as cost, competition, customers, etc. With the advent of deregulation and the instantaneous rise in competition, many of the banks have developed a competitive pricing policy. The Reserve Bank of India has relaxed the pricing mechanism for both asset and liability products. Every bank now has to set its own Benchmark Prime Lending Rate (BPLR) to put a value to its asset products.

Corporate banking products are dispersed mainly through direct sales or the ubiquitous bank branches, enhanced by phone banking and internet banking. Relationship officers are based at several branches of banks from where they make client visits to cultivate relationships and identify fresh business opportunities. Banks attempt to develop an ideal distribution mix in order to accomplish various purposes such as greater customer service, operational efficiency, and profitability. Core Banking Solutions (CBS) — are essential to the real-time management of the transactions that happen through the diverse means of distribution.

Banks have Global Relationship Management teams who try to understand the needs of international customers and create products and services suited to their needs.