2025 Trends and Developments in Online Commercial Banking

The rapidly evolving digital financial landscape is transforming the commercial banking sector, creating a dynamic environment filled with opportunities for growth and innovation. Among these, corporate cash management emerges as a key battleground where traditional banks and new entrants compete fiercely to meet the sophisticated demands of corporate treasurers, cash managers, and CFOs.

In this version of the LinkedIn newsletter “TreasurUpdate for Banks,” we explore the 2025 trends, emerging developments, and strategic imperatives in the online commercial banking space, with a focus on risk and liquidity management. The newsletter integrates insights from leading studies, including KPMG Research and the 2024 AFP Liquidity survey.

The ultimate objective is to align banking functionality with the workflows of key corporate financial stakeholders.

Market Dynamics and Growth Opportunities

Corporate cash management is witnessing significant growth, with global transaction banking revenues exceeding USD 1.4 trillion. This market's upward trajectory is fueled by corporates' increasing demand for efficient cash flow management solutions, particularly in light of recent banking crises that have heightened the need for risk diversification and stability. Notably:

• 72% of large corporates are actively reviewing their banking relationships.
• 45% of organizations moved deposits from regional to larger banks in response to crises.?
• 35% of firms diversified deposits among multiple banks.

Traditional transaction banks are heavily investing in advanced capabilities to maintain market share, while new entrants leverage modern, agile technology stacks to differentiate themselves. These developments signal an “arms race” where banks must innovate rapidly to secure competitive advantages.

Emerging Trends in Online Commercial Banking in 2025

1) Digitization and Automation

Banks are prioritizing integrated, end-to-end digital experiences. Automating processes across the value chain improves efficiency and enhances market speed which is a crucial factor in attracting and retaining corporate clients. For example:

• Digital onboarding and transaction tools.
• Automation in liquidity forecasting and reconciliation.

2) Seamless Client Experience and Connectivity

Streamlined connectivity options, such as host-to-host integrations and Treasury APIs, are becoming the norm. Corporate clients increasingly demand:

• Self-service capabilities for greater control.
• Flexible access to platforms for managing cash, liquidity, and FX transactions.

3) Real-Time Data and Insights

Real-time visibility into financial positions is vital for corporate treasurers. This includes:

• Instantaneous updates on working capital and liquidity status.
• Predictive analytics powered by rich transaction data to inform decisions on hedging and investment strategies.

4) Investment and Liquidity Tools

Liquidity solutions lie at the heart of corporate cash management. A growing number of Banks are enhancing tools to manage excess cash, optimize returns, and provide real-time investment options that align with corporate risk profiles. Examples include:

• Target balancing capabilities that automatically allocate funds across accounts to optimize liquidity.
• Advanced liquidity insights solutions, specifically targeted at companies with multiple (foreign) branches and tens/hundreds of bank accounts.
• Advanced cash sweep functionalities.
• Customized investment products for idle cash such as money market funds, Repos and Commercial paper.

5) Enhanced FX and Cross-Border Capabilities

Cross-border transactions require sophisticated tools for hedging, AutoFX, and target balancing. Innovations in this domain include:

• Automated FX conversions at competitive rates.
• Dynamic hedging solutions to protect against market volatility.
• Cross Border Payments: For example, Cross border payments solutions with integrated live and client-specific?FX rates and pre-validations for both individual as well as batch payments.

6) Value-Added Partnerships

Collaboration with fintechs enables banks to integrate cutting-edge solutions into their service offerings. Examples of this include:

• Partnering for advanced analytics tools.
• Extending a bank offering with new products, services and infrastructure
• Leveraging fintech solutions for niche capabilities such as real-time FX optimization.

Strategic Imperatives for Banks

Banks must go beyond basic capabilities (e.g., basic payments and deposits) and develop products that offer value-add and workflow embedded functions.?

The?key drivers include:

1. Have better (online) offerings that positively contribute to the bank's top line; Increase FX volumes Increase transaction volumes Increase the strategic - balance sheet supporting- deposit base
2. Lower a bank's cost base by operating more efficiently in areas such as: Advanced onboarding, predictive analytics, and real-time insights.
3. Tailored solutions address unique challenges in industries such as manufacturing and retail.

To meet client expectations effectively, banks must adopt scalable and flexible operating models. This includes standardizing global cash management capabilities and aligning regional offerings with a cohesive global strategy.

Recommendations for Banks

To thrive in the competitive transaction banking space, banks must:

1. Invest in Technology: Develop or partner for robust digital platforms offering seamless integration, real-time data, and predictive tools.
2. Focus on User Workflow Alignment: Prioritize features that align with the day-to-day operations of treasurers, cash managers, and CFO
3. Offer real value-added liquidity management solutions. Regularly review and adapt product portfolios based on client feedback and evolving market needs.
4. Leverage Partnerships: Engage Fintechs to accelerate innovation while maintaining a client-centric approach.

By emphasizing user-centric solutions, real-time capabilities, and collaborative innovation, banks can solidify their position in the evolving corporate cash management market and drive sustainable growth.

Contact us today to learn how we can help your bank stay ahead in online commercial banking in 2025.