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Why commercial banking needs to become personal too

Future banking
By Henry Pooley, Chief Commercial Officer

Commercial banking clients want to be treated like normal people. It’s that simple.

Customer experience has come on leaps and bounds in the world of consumer banking. Largely influenced by technological innovation, we now have seamless mobile transactions, highly responsive customer service and fast transaction times. Anyone in a company finance role or employees wrestling with everyday business banking must look at their corporate processes and despair at the difference.

While personal bank statements typically update in real time and can be viewed on a mobile device, reconciliation of work-based expenditures can take days, if not weeks to process. Procurement generates reams of paper invoices and purchasing orders. In contrast, personal mobile wallets pay, log receipts and reconcile on bank statements in the blink of an eye (or, more likely, the swipe of a thumbprint).

It’s time commercial banking was brought up to speed.

In our latest white paper, Business Banking with a Consumer Touch, we reveal what commercial banking customers’ expectations are and why banks need to act - fast.

The first thing to realise is that the commercial customers, who banks are dealing with daily, are digital banking natives. The white paper notes that 85% of all commercial banking customers currently use digital banking in their personal lives. But critically, 95% of those would like to see it used in their commercial operations too.

Companies of every size are already significantly invested in digital tools for commercial banking. Almost all (90%) of mid- to large-sized commercial clients (>$550m/>£338m) and 84% of small commercial clients ($33m-$550m/£22.3m-£338m) use online channels.

In addition, nearly three-quarters (72%) of businesses are actively selecting their commercial banking partners because they are influenced by their personal digital banking service.

Convenience is a big driver. Centralisation of accounts is arguably at the top of banking clients’ wish lists. They acknowledge that a great deal of time is lost managing across different systems and departments. Centralisation, therefore, offers better visibility of spending and improved time management. It also speeds up decision-making, allowing companies to maximise their working capital.

Automation is at the root of delivering these capabilities. But that doesn’t mean commercial customers expect a totally hands-off approach. Account management and customer service are priorities for 71% of commercial clients.

These two factors are generally seen to be more important than cost savings. But nearly two-thirds (60%) of commercial banking customers are under pressure to find marginal efficiencies and that pressure is growing (up 3% since 2016). Almost two thirds (63%) of customers believe that banking costs too much and anything that contributes to cutting fees (while maintaining service levels) would be welcomed.

Demand for the next generation of financial services is clearly strong and immediate. Commercial customers are looking for seamless, digital experiences today.

What is also understandable is that many established financial institutions offering business banking are finding it difficult to respond quickly to these demands. Hampered by legacy systems, siloed departments and by problems accessing cutting-edge talent and technology, they can begin to look unresponsive to clients’ needs.

The rise of challenger banks and app-based services should concern and inspire these legacy banks in equal measure. If they don’t react, and quickly, there is a real risk that customers will defect.

That said, challengers can also present new opportunities for traditional banks. Some are exploring open APIs, enabling established financial organisations to partner with challengers to deliver new services. This means that traditional banks can leverage their trust and broad range of financial offerings, while allowing innovative fintechs to provide new experiences, powered by top-level technology.

The options are wide-ranging and APIs are just one form of technology discussed in Business Banking with a Consumer Touch, impacting the commercial banking space.  

The message is clear, the demand is there and some providers are starting to answer it – no commercial bank can afford to be left behind.