While there has been much discussion about the need for digitization to support the retail banking side of the house, the needs of business and commercial banking have often been overlooked when it comes to innovation – despite the fact that focusing on these account holders enables community banks and credit unions to truly differentiate themselves in today’s marketplace.

So, how can financial institutions meet and support the digital needs of their commercial accounts and still get the most out of their overall upgrades and digitization while future-proofing their operations? This starts by keeping business banking in mind when making technology considerations and developing strategic roadmaps.

For the nation’s largest banks, allocating resources and talent over several years to build the latest and greatest technology stacks is certainly an option, and in fact, is almost “modus operandi” for many. For those that choose not to build their own, they can easily partner with technology providers that offer deep, comprehensive application programming interface (API) integrations – aided by the fact that these institutions have the time, money and employees needed to oversee the entire process and ensure a smooth deployment of these integrations.  

For most regional and community institutions, however, this may not be so easy (or even an option). A recent Forbes article highlighted this disparity – how banks spend tons (literally) on technology with information suggesting a rapidly growing gap between the largest and smallest banks’ expenditures, along with how much they can actually afford to further invest in developing new technologies. All of which means big banks continue to pull even further ahead while regional and community banks often fall behind in their technology, which is a major competitive disadvantage.

Some community institutions are combatting these challenges by catering and focusing on business account holders. In doing so, many are establishing a solid foothold in the market. If last year’s race for PPP loan approvals and servicing taught us anything, it is that many businesses were quick to take their business – and the financial relationships associated with it – to new FIs that had the desire, the capabilities and the technology to support their needs. 

While larger institutions have already set aside the budget, time and other resources needed to build the right technologies and/or grow tech partnerships for enriching both retail and business customer relationships, smaller institutions must come to the digital transformation table with a bit more caution and a lot more strategy. For these banks and credit unions, finding their own focused niche in the market can be much more effective than essentially trying to boil the proverbial ocean when it comes to digitization, and creates the opportunity to target and attract specific consumers — perhaps even opening entirely new lines of business opportunities. Once they do so, they can then set out to form strategic partnerships with the technology providers that will actually add real, tangible value to the institution and its customers’ or members’ needs.

This can be an extremely critical (and lucrative) move for an institution, as traditionally, the resources often funneled towards the retail banking experience have not been leveraged when it comes to investing in technology to improve the business banking and small-and-medium business (SMB) lending experience. This means banks and credit unions inadvertently end up neglecting some of their most important, high-value and high-return account holders – business owners. However, by investing in digital capabilities that streamline and automate their experience, from account opening to servicing, financial institutions can bring the power of automation to business banking and SMB lending, creating better, faster, more transparent digital experiences for their business customers.

In today’s fast-paced, digital-first world, some institutions have a tendency to throw out a wide net when it comes to innovation, in an attempt to cover as many areas as possible. While it can seem a good idea, it can often result in a lot of wasted time and money. By focusing on the gaps in their technology stack impacting business customers, they can provide solutions that specifically help these account holders overcome some of their most common banking challenges. This not only strengthens their relationships with those current customers or members but could also eventually help develop a marketplace reputation for being a preferred financial partner for business owners.

So, what do business owners want from their banking? Unsurprisingly, many of the same things consumers want and expect – good customer service and a partner that truly understands their needs. Aside from these, business owners often face several common pain points when it comes to banking, starting with their initial account opening, which can often take several days and require significant amounts of data. Anything FIs can do to streamline this process not only helps alleviate this common problem but also sets the stage for a good relationship right from the start.

Another major concern for business owners is transparency when it comes to their banking, an issue that was again highlighted by the PPP process. A survey conducted by PwC looking at the financial challenges of small and medium business owners showed that only 22% of respondents were satisfied with the transparency around the qualification criteria from their banks, and only 23% with the ease of filling out the application. With the survey data also suggesting that 22% of those same business owners are now considering switching financial institutions over the next year, it is clear how providing an easy, user-friendly experience is vital to maintaining these relationships.

Business owners are often tech savvy, and they expect the same from the financial institutions. Both figuratively and literally, today’s business customers are on the go, and this means mobile banking capabilities are crucial. While retail banking has made good strides here, it is not something that has traditionally been handled very well for business account holders. Banks that offer robust, comprehensive online and mobile services for business customers will definitely stand out in the market.

Digital transformation continues to be a high priority for financial institutions. And while this is a good thing, banks and credit unions must be careful to ensure they are being thoughtful and strategic in its application. This is especially true for smaller institutions, which likely do not have the massive budget and resources to take a “blanket approach” when it comes to technology. However, by focusing on specific customers like business account holders, catering to their specific needs, and forming strategic partnerships with the right technology providers, community banks and credit unions can stand out from the crowd both now and in the future.

Heang Chan is Co-Founder and CEO of Prelim, a fintech provider that optimizes digital banking experiences for financial institutions. For more information, connect with Heang on LinkedIn or visit Prelim’s website.

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