What is Corporate Banking?

Corporate Banking (CorpB) is an umbrella term on a particular aspect of banking that provides financial products and services to companies. Companies served by corporate banks range from small and medium enterprises (SMEs) to multinationals (MNCs).

MNCs refer to large companies that have a business presence in multiple countries while SMEs are companies that operate primarily in their home country with a smaller workforce. 

Did you know? The Many Names of Corporate Banking: Institutional Banking Wholesale Banking Business Banking Small Medium Enterprise (SME) Banking Commercial Banking Enterprise Banking

Corporate Banking in Singapore

• Contributes immensely to Singapore’s economic development by providing financial solutions that (i) channel funds to companies for growth and (ii) facilitate payments to enable trade. 
• Corporate Banking in Singapore has matured and specialized that they were able to segment the clientele by size and sector to serve the different groups better. 
• As Singapore is an Asian business hub with many foreign companies having physical presence, this resulted in (i) wider business opportunities for existing corporate banks, and (ii) setting up of many foreign corporate banks. This contributed to Singapore’s position as a financial center. 
• In recent years, Singapore’s corporate banks have also focused more on supporting SMEs, social enterprises and sustainable finance. 
• Examples of some corporate banks operating in Singapore comprise home grown DBS, OCBC and UOB and foreign corporate banks such as Citibank, HSBC, Standard Chartered Bank, Mitsubishi UFJ Financial Group Bank and Bank of China. 

Products and Services of Corporate Banking

The wide array of financial solutions that corporate banking provides is shown in the following graphic:

Value Proposition Offered by Corporate Banking

• Convenience – One-stop shop to cater to the financial needs of the corporates.
• Expertise – Specialized expertise to address the unique requirements of a wide range of industries and companies. 
• Network – Ecosystem for clients to network and interact for business opportunities. 
• Regional /Global Expansion – Corporate Banking can provide seamless international transactions from country to country, providing global or regional access to markets for corporate banking clients. (For example, corporates can utilize Standard Chartered Bank’s network in Africa to explore opportunities).

Current and Emerging Trends  

Current and emerging trends have shaped the value proposition offered by corporate banks.

• Digitalization – There is an increased focus on adopting digital solutions to enhance the efficiency of the banking process such as payment systems.
• Support financial inclusion – Many SMEs that contributed greatly to a country’s employment are often constrained by lack of access to bank loans. To address the issue of SMEs being unserved or under-served, corporate banks started dedicated programmes targeting the needs of SMEs.
• Sustainable finance – Awareness of environmental concerns and mindful of their social responsibilities to support Singapore’s ambition as a green finance hub, corporate banks in Singapore have initiated programmes to fund green projects. Corporate banks will also try to integrate Environmental, Social and Governance (ESG) risk into their existing risk management structure.
• Specialized industry-based approach – Dedicated teams, organized based on industry classification, serve clients better by combining deep expertise in a specific sector with customized financial solutions.

Did you know? Since 2019, many banks (including local banks such as DBS, OCBC and UOB) haved stopped financing entities or projects related to coal-powered plants worth more than USD1 billion and have since shifted to initiating programmes to fund green projects. This is in support of Singapore's ambition to be a green finance hub and environmental protection imperatives.

Key Challenges  

• FinTech – Fintech companies are challenging corporate banks in some segment of service offerings as they can provide similar services at lower cost. These are usually the plain vanilla services such as providing platform for payments. This challenge is more accutely felt for corporate banks serving smaller companies.  
• Disintermediation – Proliferation of technology and evolving attitudes towards digital solutions have contributed to the growth of peer-to-peer platforms for funding, and thus bypassing corporate banks. 
• Margin squeeze – Competitive landscape of the corporate banking scene, potential loss of revenue to fintech companies on some service offerings, and increasing cost of compliance have led to margin squeeze. 
• Re-looking at risk management – Recent global developments such as trade war between the world’s biggest economies, geopolitical risk and pandemic have given rise to the need to consider risk more holistically when accepting clients. Risk management has evolved beyond focusing on Market Risk, Credit Risk, Operational Risk, Liquidity Risk and Compliance Risk.

Banking glossary