The number of businesses in the U.S. represent opportunities for financial institutions (FIs) to grow—but only if those FIs are digitally equipped to provide what businesses want and need from their digital banking experience. Though FIs see the potential in serving small and medium-sized businesses, regional and community banks and credit unions are still largely unaware of what business users expect from their FIs. These unknowns are reflected in the digital banking experience, where businesses of all sizes face friction and lack of functionality where they need simplicity and time saving the most.
We’ll explore some specific digital banking features businesses have recently expressed a need for, and that can position FIs to better compete for gaining business partnership.
The role of data in business banking
Whether FIs utilize it to remain competitive or to better serve their users, their future is in data and analytics—this is especially true in dealing with businesses. Yet this is still where banks and credit unions need to build their capabilities. Businesses find that most digital banking platform-generated reports especially need improvement. According to Aite, “approximately 65% of small businesses state they have to create many of their own reports because those provided by their primary financial institution do not effectively meet their needs.”
Business users expect a level of relevance and customization found in other digital experiences, but their digital banking platforms tend to leave them spending time performing tasks manually that don’t deliver actionable insights. This leaves business users feeling misunderstood by their FIs. Banks and credit unions also experience negative results from lack-luster business banking in this situation, as they can lose valuable chances at establishing or strengthening relationships.
Since business owners are looking for the kinds of digital experiences that help them efficiently manage their finances in a simple way, FIs must turn to digital banking platforms that are powered by data and machine learning. In addition to a preferred user experience (UX), data use now establishes an FI’s competitive advantage. When putting their data to use for business users, FIs can personalize digital banking and develop predictive capabilities that help with targeted marketing, offering products and services when they need them most.
Business banking requires extensibility
The needs of businesses are always evolving, requiring tools that allow for easy, efficient business management at any stage of growth and in the face of any new challenge. But a number of businesses don’t feel they can trust their bank or credit union to face those challenges with them. Aite research shows the majority of businesses that bank with a community FI, approximately 68%, don’t see their primary financial institution as innovative. This is especially an issue with credit unions.
Businesses’ need for innovation has led them to tech partners outside of their primary FI. Aite research also shows more than 60 percent of small businesses have to look beyond their FI to meet at least one financial need. If their FIs offered the products and services other partners provide, 57 percent of small businesses are willing to pay for those that help them manage their finances, and 51 percent are willing to pay to more quickly collect on outstanding receivables with tech directly from their FI’s digital banking platform.
Digital banking has evolved to meet the latest business needs with extensibility, the ability to integrate and customize the digital experience with built-in platform resources. Enhanced single sign-on, software development kits (SDKs), and application programming interfaces (APIs) enhance competitiveness by providing FIs and their business users the flexibility and simplicity they need through integrations with third-party fintech providers.
Banks and credit unions that aren’t focused on keeping pace with digital banking innovation not only risk losing the faith of their business users, but also losing relevance in other markets. However, FIs have the ability to catch up and keep up with an extensible business banking platform.
The big picture for business banking
Alkami and Aite Group research has found businesses are more loyal to banks and credit unions that help them efficiently manage their finances in a simple way. The right online banking platform, one that runs on data and allows for extensibility, helps FIs and their business users improve control, efficiency, and data-driven insights that drive customer loyalty on both ends.