85% of bank clients plan to work with non-bank lenders: Report

The research showed that 85 per cent of corporate clients plan to engage with a non-bank financial institution within the next 12 months, in search of faster, more transparent, and responsive services.

CIB clients say they expect real-time responsiveness (58 per cent), personalized engagement (49 per cent), and innovative solutions (40 per cent) - but less than one-in-four (23 per cent find CIBs currently meet those needs.

Instead, many flag that CIBs offer limited integration with ERP and treasury systems forcing manual workarounds (92 per cent), display a lack of personalization and flexibility (89 per cent), and insufficient advanced analytics and forecasting capabilities (68 per cent).

Adding to their challenges, CIB executives report that current innovation programs are not delivering the expected results. A vast majority (82 per cent) say these efforts are not producing improved revenue via new products, while 51 per cent of respondents say they did not deliver the expected cost savings.

As client expectations rise, banks are finding they have limited capabilities to respond. Executives say that only 29 per cent of their IT budgets are currently directed to transformative technologies, while 43 per cent goes towards running and maintaining legacy systems.

In addition, 61 per cent of CIB executives say they are constrained by high compliance costs.

The findings come as Capgemini analysis shows CIB revenue growth is decelerating, with a forecasted 5.4 per cent compound annual growth rate (CAGR) over the next five years - down from 6.5 per cent between 2022 and 2024.

Despite structural headwinds, banks are continuing to broaden their product and service portfolios to remain competitive. CIB executives are prioritizing real-time treasury capabilities for cross-border payment flows (77 per cent) and next-generation AI market products for algorithmic trade execution, such as AI-driven hedging, and research insights (65 per cent). More than half are exploring tokenized products (51 per cent) to unlock new fee streams through digital custody, token issuance, and premium services.

"Non-banks are closing the competitive gap with established corporate and investment banks. Client demands have shifted dramatically, and while CIBs have invested heavily in AI, many are struggling to move beyond the pilot stage. A key reason is governance - only 26 per cent of banks operate with centralized AI oversight, making teams hesitant to automate crucial business processes," said Catherine Chedru-Refeuil, Global Head of Corporate and Investment Banking at Capgemini.

"To succeed, CIBs must adopt a disciplined approach: creating enterprise-grade platforms and cultivating an ecosystem of trusted partners. Early adopters will see tangible benefits in the form of deeper client engagement, improved fee income, and materially lower costs."

According to the report, CIBs will need to move on multiple fronts simultaneously to adapt to competitive pressures. Banks must take a critical look at their operating models to deliver a smoother client journey, rebuild their data and technology foundations to improve speed and embed AI governance into all major decisions. Equally important is client trust that CIBs have earned through decades of regulatory accountability - but remains a pressing challenge when it comes to AI-driven innovation. Many clients (89 per cent) question the reliability of AI-generated outputs in banking services, underscoring why transparency is key to earning their confidence. (ANI)