2024 Trends in Business and Commercial Banking

The business and commercial banking landscape is evolving rapidly. In this blog, we’ll explore Alkami’s top five trends shaping the future of the business and commercial banking sector. This is an update to last year’s trends list.

In 2024 financial institutions will be, or should be, focusing on strategic treasury management solutions (particularly fraud protection), artificial intelligence (AI) automation, real-time transactions, lending, and even redefining commercial banking solutions as a whole.

These trends not only empower the business owners and operators, increase utilization and stickiness of accounts, but they also enhance the security and efficiency of the financial institution itself.

1. Strategic Treasury Management Solutions

Businesses and their banking technology partners are placing a renewed emphasis on strategic treasury management solutions. What exactly is ‘strategic treasury management’? The approach is packaging up offerings that fundamentally improve payment processes, enhance working capital efficiency, and strengthen compliance and continuity measures. Key pillars of this strategy include:

• Payables and Receivables Management
  Streamlining these processes for better cash flow management. Offering Positive Pay for credit originators for wire, ACH and instant payments is critical. 
• Liquidity Optimization
  Ensuring availability of funds when needed, while maximizing returns on idle cash. 
• Information Management
  Empowering decision-making with accurate and timely financial data. 
• Fraud Prevention
  Implementing advanced measures to safeguard assets and transactions, such as Positive Pay, tokenization, biometrics and dark web monitoring, to name a few.

Learn more about the many available security and fraud prevention solutions available to financial institutions.

2. Investing in AI for Automation, Personalization, and Insights

The use of AI in commercial banking solutions is becoming increasingly prevalent. Small businesses are already feeling market shifts and are open to using artificial intelligence automation, data and online experiences as a result of digital transformation. In 2024, the industry will see an increased use of artificial intelligence in banking across various domains:

• Customer Service
  Enhancements like self-service options, quicker response times, and improved sales experiences. 
• Sales and Marketing
  AI-driven content creation, data-driven strategies, website personalization, SEO optimization, and more effective lead generation. 
• Software and IT
  Streamlining processes from inception and planning to coding and testing. 
• Product Research and Development
  Accelerating product analysis and customization, tailored to each organization’s unique needs.

3. Real-Time Transactions

Real-time transactions are becoming a norm. In 2024, businesses want 24/7 payment capabilities and seamless fund transfers across accounts and institutions. Speed of payments is essential. Research shows that speed is ranked very high on small businesses’ list of banking priorities*, but their satisfaction with the current speed of their banking has ranked low. 

Financial institutions should evaluate the types of electronic funds transfers including instant payments, breaking down their fees, limits, speed, and typical use cases to give businesses the flexibility and efficiency they need.

4. The Evolution of Business and Commercial Lending

Due to the state of the economy, holding onto business accounts will involve engaging with them on what their unique lending and investment needs are. This means using outreach as well as transaction behaviors to uncover what is important to them, on a case by case basis, then providing personalized offers based on that data.

2024 will bring further focus on the following, when it comes to lending: 

• Compression of net interest income
• The impact on borrowers and loan demand
• Asset and liability management
• Deposit attractiveness
• Capital adequacy and regulatory requirements

5. Redefining Business & Commercial Banking Solutions

This year we expect to see more marketing efforts made to promote business and commercial banking solutions. New businesses in the U.S. have been trending up since 2010, and new business startups are only increasing.

Business owners today are more tech savvy, younger, are more concerned about saving money and banking securely. According to Bloomberg, the average age to start a business is 34, meaning we can expect an increase in Millennial-owned businesses this year. Appeal to this audience of startup founders and operators first with comprehensive treasury management solutions that address the needs of complex, multi-entity commercial businesses with an approachable user experience to accommodate businesses of all sizes.

Alkami telemetry data identified an adoption gap between small business owners and business or commercial banking products. Many are managing their finances out of consumer accounts.