As explained in the preceding post regarding the recent PwC-Whitepaper “Establishment of banks: an option for corporations?”, the establishment of corporate-owned banks is not a strategic option for the german industrial sector even though the automotive industry is using them with great success.
These results contrast with the high demand for individualized financial services. Every other surveyed corporation wishes for increased efficiency and professionalization of financing activities within the firm. Beyond that working capital-management (36%), securing sales (34%), securing the supply-chain (27%) and diversification of business activities (27%) were central needs.
Commercial banks will not be troubled by emerging competition in terms of corporate-owned banks for now but they must not feel too secure as this is not due to the quality of their service but rather the enormous barriers of entry for corporations. The Whitepaper provides not only fields of action – especially in terms of consulting and product design – but also opportunities for the development of new business areas. Proposed actions might be structured financing for sectors or unions, supplier credit platforms, joint distribution activities or the offering of white-label-products. However, corporate decision-makers have to get themselves into banksided innovations and try to comprehend and exploit their potential together. Financial Covenants are agreed upon increasingly but are often seen as a burden for corporations. If those risk management benchmarks are individualized to fit specific sectors or corporations, they will have a positive impact for both parties. While various forms of cooperation between commercial banks and cooperations may appear promising, each party has to be aware that the realization of actual surplus value requires honesty, timely exchange of knowledge and the willingness to progress.