The dynamic landscape of business banking solutions continues to evolve with new trends and challenges impacting digital banking platforms. During a recent episode of the “Banking Transformed” podcast, industry experts Jim Marous, co-publisher of The Financial Brand, Jacob Leick, director of product management at Alkami, and Mandy Lopez, CTP, CSSGB, PSPO, product manager lead at Alkami, shared their insights on how financial institutions can stay ahead of the curve and adapt to the changing needs and expectations of their commercial clients. 

The rise of consumerization in financial services is a significant trend shaping the future of business banking solutions. This term refers to the impact that consumer-originated technologies have on enterprises, affecting how they adopt and utilize new technologies that originated in the consumer space. This trend is critical as businesses of all sizes increasingly open to new financial provider relationships, seeking an easy-to-use digital banking platform experience that can save time and enhance their operations.

Watch the full episode here:

Based on this deep dive, here are the top 10 business banking insights that banks and credit unions should consider to stay competitive and responsive in today’s market.

1. Emphasize Exceptional Customer Service: The consumerization of banking means that clients expect interactions to be as user-friendly as consumer apps like Uber and Amazon. Regional and community financial institutions (RCFIs) can leverage this trend by focusing on personalized customer service, a traditional strength that differentiates them from larger banks. By understanding the unique financial situations and cash flow patterns of each business, banks and credit unions can tailor deposit products to suit their clients’ needs. For example, a business that frequently uses short-term loans for working capital might benefit from a high-yield savings account to manage surplus cash. This proactive engagement builds stronger relationships and increases the likelihood of businesses consolidating their deposits with the financial institution.
2. Harness Advanced Technology: Smaller financial institutions now have access to technologies once reserved for larger institutions. Implementing advanced treasury management solutions, such as commercial remote deposit, ACH and wire origination, lockbox services and integrated payables and receivables, can significantly enhance service offerings.
3. Improve Operational Efficiency: Efficiency is key, especially in back-office operations. Automating routine processes like billing and call center interactions can help manage growth effectively and allow staff to focus on high-value activities that improve customer and member relationships.
4. Tackle the Challenge of Deposit Growth: With megabanks owning nearly 90% of business deposit accounts, RCFIs must develop innovative strategies to attract and retain these valuable relationships, which are crucial for funding and income. For example, Alkami customers are leveraging upSWOT, a leading fintech platform that connects business applications for integrated data analysis and insight, to help businesses manage their finances more effectively. Businesses that are better able to manage their cash flow are more likely to maintain higher deposit balances, as they can predict their financial needs more accurately and plan their deposits accordingly.
5. Utilize Predictive Analytics and Artificial Intelligence (AI): Technological advancements like artificial intelligence in banking can significantly improve fraud detection and security. These tools utilize behavioral biometrics and predictive analytics to identify and prevent fraudulent activities in real-time, ensuring the safety and security of businesses’ financial transactions.
6. Offer More Than Just Favorable Lending Rates: While competitive lending rates are important, banks and credit unions need to offer comprehensive commercial banking solutions that address a wider range of business needs, from payroll services to sophisticated treasury management.
7. Focus on Human Connections: Despite the push towards digitalization, the success of business banking still relies heavily on personal relationships. Banks and credit unions should ensure that technology enhances rather than replaces the human element and white glove approach of concierge banking.
8. Stay Agile to Adapt Quickly: The ability to quickly adapt to regulatory changes and market conditions is more crucial than ever. Agility can be a significant competitive advantage, allowing smaller institutions to respond to opportunities and threats more effectively than larger, less nimble competitors. Selecting the right digital banking partner that embraces a culture of innovation is essential to maintaining this agility.
9. Leverage Data for Better Decision Making: Data is a powerful tool in understanding and serving clients better. Financial institutions should invest in systems that allow them to gather, analyze, and act on data to improve offerings and customize their services.
10. Build Partnerships and Collaborations: Collaborating with fintech companies can provide community banks and credit unions access to innovative technologies and services without the need for extensive in-house development, enabling them to remain competitive in a rapidly changing industry.

Leveraging Strengths in Business Banking Solutions to Build Lasting Commercial Relationships

By focusing on these key areas, banks and credit unions can navigate the complexities of modern business banking, leveraging their unique strengths to build lasting relationships with their business clients.

FAQ: Business Banking Solutions for Banks and Credit Unions

How is consumerization impacting business banking solutions?

Consumerization significantly influences business banking solutions by setting new standards for technological adoption, much like the transition from BlackBerrys to Apple iPhones in the corporate world. Initially, BlackBerrys dominated corporate communications due to their security and business features. However, the introduction of iPhones marked a shift in consumer expectations towards more versatile and user-friendly devices, which gradually permeated the business sector. When iPhones first emerged, they were popular for personal use because they integrated music, photos, and internet access in ways that business-oriented devices like BlackBerrys did not. It took years for businesses to adopt iPhones, but once they did, the change significantly enhanced how professionals interacted with technology and each other. This shift is mirrored in business banking solutions today as financial institutions move towards digital banking platforms that prioritize user-friendly interfaces and versatile functionalities to meet the evolving expectations of their commercial clients.

What are the main challenges for RCFIs in adapting to consumerization?

The main challenge for RCFIs is balancing the need for advanced digital functionalities with maintaining an intuitive user experience. RCFIs need to offer sophisticated treasury management solutions without complicating the digital experience for their clients.

How can RCFIs compete effectively with megabanks in acquiring business operating accounts?

RCFIs can compete and differentiate by focusing on personalized experiences and exceptional customer service, areas where megabanks may fall short due to their size. By offering tailored digital banking experiences and building strong relationships, RCFIs can attract businesses looking for more than just financial transactions.

What role does technology play in the future of business banking for RCFIs?

Technology, especially platforms like Alkami’s commercial banking solution, levels the playing field by providing RCFIs with the tools to offer services comparable to those of megabanks. This includes advanced data analytics in banking, real-time payments, and enhanced risk management capabilities, allowing RCFIs to focus on their strengths like customer service and community involvement.

By focusing on these insights and understanding the evolving landscape, banks and credit unions can better navigate the complexities of modern business banking, leveraging their unique strengths to build lasting relationships with their business clients.

Interested in learning more about Alkami’s Business and Commercial Banking Solutions?