85% of banks’ corporate clients plan to engage with a non-bank financial institution within the next year as competition with private capital intensifies

Core Insights - Corporate and investment banks (CIBs) are facing increasing competition from non-bank financial institutions, with 85% of corporate clients planning to engage with non-banks within the next year for better services [1] Client Expectations and Current Performance - CIB clients expect real-time responsiveness (58%), personalized engagement (49%), and innovative solutions (40%), but only 23% feel that CIBs currently meet these needs [2] - Many clients report that CIBs have limited integration with ERP and treasury systems (92%), lack personalization and flexibility (89%), and insufficient advanced analytics and forecasting capabilities (68%) [2] Innovation Challenges - A significant majority (82%) of CIB executives believe current innovation programs are not generating improved revenue from new products, and 51% report that these programs did not deliver expected cost savings [3] - Only 29% of IT budgets are allocated to transformative technologies, while 43% is spent on maintaining legacy systems, and 61% of executives cite high compliance costs as a constraint [4] Revenue Growth and Strategic Focus - CIB revenue growth is slowing, with a forecasted compound annual growth rate (CAGR) of 5.4% over the next five years, down from 6.5% between 2022 and 2024 [5] - CIBs are expanding their product and service offerings, focusing on real-time treasury capabilities for cross-border payments (77%) and next-generation AI market products (65%) [6] Competitive Landscape and AI Adoption - Non-bank financial institutions are narrowing the competitive gap with CIBs, as many banks struggle to move beyond pilot stages in AI implementation due to governance issues, with only 26% having centralized AI oversight [7] - To succeed, CIBs need to create enterprise-grade platforms and build ecosystems of trusted partners, which can lead to deeper client engagement and improved fee income [7] Cultural and Technological Barriers - Cultural issues are significant obstacles to AI adoption, with 39% of surveyed executives indicating that a conservative culture hinders experimentation with new technologies [10] - Banks are looking to hire external talent (40%) to enhance their AI capabilities, while only 23% are investing in internal reskilling [10] Research Methodology - The findings are based on insights from 750 senior executives across corporate and investment banks, large corporations, and non-bank financial institutions with annual revenues of USD 1 billion or more [11]