Small and medium-sized businesses (SMBs) are the backbone of the United States’ economy, accounting for 99.9% of all U.S. businesses (SBA, 2021). Despite the consequences of the COVID-19 pandemic, over 4.3 million Americans filed paperwork in 2020, ready to embark on their entrepreneurial journey. When addressing their financial needs, business owners want a financial institution (FI) who acts like a true partner – one who prioritizes convenience, security, and accessibility when it comes to treasury management. Running a business comes with its own hurdles in day-to-day activities; business banking should alleviate these stressors rather than creating new headaches.
In the latest Digital Banking Market Pulse, Alkami’s market-led research found that 51% of SMB respondents contributed their primary banking relationship to where they deposited checks or cash. While SMBs may rely on their FI for a myriad of digital banking services, this relationship will not deter them from turning to fintechs for faster access to loans.
Consumer banking trends are bleeding into commercial banking. As a result, online business users have grown to expect the same convenience in their online business banking experience. Without evolving commercial banking software, businesses will turn to fintech providers to fill the gap with intuitive, real-time financial services. In research conducted by Capgemini, they found that over 60% of SMBs used an alternative provider – not their primary financial institution – for payments, receivables, or other business services.
With fintechs taking business lending market share away from traditional FIs, banks and credit unions need to reevaluate their business banking services in order to attract and retain business relationships. As businesses grow accustomed to lending services from fintechs, there is an alarming opportunity for additional banking services to leave the primary banking relationship.
FIs are uniquely positioned to understand complex regulations and simplify antiquated processes to drive customers’ or members’ success. By leveraging a commercial banking platform, FIs can introduce a future-proofed treasury management strategy – focused on simplifying manual processes through automation, strengthening fraud prevention, improving reporting and data analytics, and managing cash flow.
When thinking about treasury management, FIs should establish two primary goals: deepening account holder relationships and driving non-interest income. While it’s easy to set objectives, it’s harder for FIs to make their vision a reality. To compete, FIs should focus their investments on: a robust digital banking solution that provides frictionless, intuitive experiences for business users, and a digital account opening solution that empowers FIs to attract and seamlessly convert new users – in turn growing FI market share and account holder loyalty.
Historically, treasury management services have required time-intensive, manual processes reliant on legacy systems. By addressing these barriers, treasurers can eliminate repetitive tasks and fulfill their risk and liquidity operations more strategically. In turn, business users will benefit from automation and fraud prevention efficiencies while conducting their daily cash management activities.
In order to overcome these challenges, banks and credit unions need to invest in a comprehensive business banking platform that strikes a balance between an intuitive user experience (UX) and security and fraud prevention. Ultimately, a successful treasury management system should enable FIs to attract new users, retain account holders, and seamlessly achieve compliance objectives.
By combining treasury management with a payment fraud prevention solution, FIs can:
In a digital-first world, FIs can no longer afford to compromise UX for antiquated systems and fraud preventive measures. Instead, they should go hand-in-hand. Businesses want to feel protected by their FI, but they do not want to be treated like a criminal when it comes to cash management and everyday banking tools. They want a personalized experience that makes it easier for them to run their business. Instead of seeing fraud prevention as a back-office cost center, Alkami puts security measures in the hands of business users. This evolution creates a new found revenue source for FIs as they broaden their avenues of generating non-interest income.
Commercial banking has gone far beyond initiating a wire transfer to a full suite of products with capabilities that facilitate seamless reconciliation, payment processing, and business householding. As businesses grow, so should their digital banking capabilities. With Alkami, FIs can strengthen SMB relationships with a platform built to promote users’ growth and scale with them as they expand their operations.
