Use of data science skills to make corporate finance decisions is expanding to inform everything from IPO participation to foreign exchange to new product development.
A common thread amongst many of Global Finance’s 2020 Most Innovative Banks in Corporate Finance is a concentration on helping client companies analyze capital markets in ways that enable better decision-making. That represents a significant shift in where banks see their next frontier in the ongoing digital transformation of the sector.
Gartner predicted in February that robotic process automation (RPA) would eliminate 20% of repetitive “non-value-added tasks” within finance departments this year, cutting costs, reducing errors and increasing efficiencies. Yet, Gartner is also advising companies to add data science skills to their corporate finance decision-making resources. Data science, artificial intelligence and machine learning provide the means for organizations to see more clearly into an uncertain future, says Carlie Idoine, senior director analyst at Gartner.
More specifically, they help companies simplify complex corporate finance processes; linking them with real time insights and market values provides companies with the finance intelligence required to help steer them through difficult times.
Bank of America’s Predictive Intelligence Analytics Machine (PRIAM) applies machine learning to predicting participation in initial public offerings.
“Bank of America saw an opportunity to supplement our bankers' deep domain expertise in equity capital markets with data-driven insights based on past and current market dynamics,” says Elif Bilgi Zapparoli, co-head of global capital markets at Bank of America Securities. BofA PRIAM “identifies the investors most likely to be interested in participating in a transaction with a degree of accuracy better than 80%, based on the equity offering details, investors' historical deal participation, public and proprietary data.”
BofA plans to continue building out PRIAM’s predictive capabilities, including insights about demand sensitivity to price and size, “and add Asia Pacific to complete the global use of BofA PRIAM within our firm,” says Zapparoli.
Global Finance recognizes Alfa Bank Belarus for its Online FX in InSync mobile app to rethink management of currency exchange orders. The service allows clients to make a proposal to the bank about the FX rate for a specific transaction, but with a fixed validity period, anywhere from 15 minutes to two days. Clients can change the amount requested or the desired rate or extend the validity period at any time during the life of the application or cancel it if the application has not yet been executed. The new service will appeal to customers who are constantly on the move and don't have the ability to track the dynamics of the rates, says Asseco. Since it was launched last year, FX InSynch logged $136 million in FX operations.
Although not yet live, AscendantFX’s FX Payee Intel, which started development in 2019, is an automated system aimed at speeding up collection of payee data while preventing avoidable errors. The UK-headquartered payment solution provider says FX Payee Intel can reduce days’ worth of work into a matter of hours or minutes. Reducing returned payments also reduces incurred bank fees.
Bonds Made to Order
Two of this year’s innovators launched bonds tailored for specific markets. In February of last year, BBVA issued its Blockchain Green Bond, the world’s first structured green bond using a fully automated, self-service blockchain platform. The offering changes the way issuers, investors and other parties on a bond issue collaborate, BBVA says. It also adds transparency, confidence, efficiency, flexibility and speed to transactions, since negotiation of the structure and price and creation of documentation for the bond are part of the same tool.
Last August, working with the International Development Bank, Banistmo launched the first gender social bond in Latin America with a $50 million issue. Aimed exclusively at expanding access to financing for women-led small and medium-sized enterprises in Panama, it’s hoped the be offering and others like it will promote entrepreneurship and women's economic empowerment in Panama and, perhaps, other countries in the region.
Other innovators focused on improving technology for corporate financial services, giving client companies greater control of the process.
Turkish Economy Bank (TEB) has improved its CEPTETEB ISTE SME digital banking platform, including an extended dashboard, financial calendar and asset and liabilities pages that enable customers to easily track their financial status in real time. The dashboard also provides consolidated data for current accounts, deposit accounts, foreign currency accounts, gold and silver accounts, credit cards, funds, checks and loans while the financial calendar maps past and future payments.
Spain’s CaixaBank introduced CaixaBank Digital Onboarding, which includes biometric authentication as part of its video identification routine. The process includes documentary verification and a facial biometric comparison between a trusted source image and the live image of the user, allowing customers to be onboarded via their mobile phones.
ING’s CoorpID allows corporate users to securely store their know-your-customer documents once in centralized digital vault and explicitly consent to access for multiple banking partners. Bank-specific information can be requested over CoorpID and accessed for review at any time.
Sygnum, the Swiss digital asset bank, has created a tokenization offering that enables issuance of digital tokens on a blockchain representing a tradable asset. Tokenization reduces the cost and time issuers need to spend raising capital and managing corporate actions while providing investors with access to a wider range of financial assets—in particular, typically illiquid assets such as private equity and private real estate—at reduced minimum investment amounts and with the potential for greater liquidity.
Sygnum Digital CHF, a settlement token pegged to the Swiss franc, acts as a bridge between other digital assets and national currencies, increasing the ease and efficiency of transactions. Paired with Sygnum’s asset tokenization offering, Digital CHF creates a seamless, end-to-end tokenization solution for clients, facilitating almost immediate settlement of transactions and execution of smart contract payment structures: for example, dividend pay-outs and other corporate actions.
Asseco Customer Intelligence, developed by Polish software firm, investigates customer banking activities and behavior. It gathers both transactional and behavioral data and uses machine learning and artificial intelligence to analyze immediate requirements, helping banks develop products that better match customer needs. Data collected in a bank's systems and customer activities observed on electronic channels enable the program to identify the leads’ customer profile and recommend the best offer using machine learning algorithms.
Corporate Finance Innovators 2020
|Alfa-Bank Belarus||Online FX in InSync Mobile App|
|Asseco||Asseco Customer Intelligence|
|Banistmo||First Gender Social Bond in Latin America|
|Bank of America||Predictive Intelligence Analytics Machine|
|BBVA||Blockchain Green Bond|
|CaixaBank||CaixaBank Digital Onboarding|
|Sygnum Bank||Digital Asset Banking Services and Products|