Banks Tinker with Ways to Push Business Customers into Digital Era

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Banks might need to give their business customers a little nudge into digital payments.

Although payments have been one of the hottest part of fintech, much of the commercial world is still relying on cash and checks. For banks, this presents an opportunity to help their clients, trim expenses and gain further insights into their customers' businesses. The challenge is getting the customer on board.

"While there has been a lot of innovation and advancements in the payments space in general, a lot of businesses are making payments the old-fashioned way; nearly 50% of B-to-B payments are made by old paper checks," said Jeff Jones, president of U.S. Bank Corporate Payment Systems. "We try and support their existing legacy needs while also trying to migrate them to the future."

U.S. Bank is just one of many institutions and fintech startups seeing the world of commercial payments as ripe for disruption. Banks like Wells Fargo and KeyCorp are focusing more on commercial payments, while fintech firms like Currencycloud and Autobooks are eyeing it, too.

Over the summer, U.S. Bank launched AP Optimizer in conjunction with the accounting software firm Sage. The product streamlines multiple payment methods such as check, virtual card, ACH and wire into one process. It also evaluates payments and cash flow data and identifies best times for businesses to make payments. Last year, the bank launched an online receivables management tool that integrates multiple payment types into a single portal to help clients with exception management, cash application and reporting.

U.S. Bank hopes providing tools such as these helps spur customers who are still largely dealing in paper-based payments to consider going digital, which saves time and money for both the bank and business.

Wells earlier this year unveiled a new treasury management fraud tool that allows customers to manage checks and electronic payment fraud from one single application. The service, called Fraud Manager, allows customers to access reports, preapprove items and make pay decisions within a single central location to help customers manage paper and/or electronic payments. It previously had separate paper and electronic fraud protection tools.

It "allows users to use the same sort of decision process in one application instead of toggling between two," Laura Lee Orcutt, senior vice president in the treasury management group at Wells Fargo. "It surfaces all the transactions they have to make a decision on in one place, and it saves them a lot of time."

While Orcutt acknowledges payments innovation "is a little bit slower on the B-to-B side," the bank is nonetheless putting a focus on corporate payments tech tools and preparing customers for the future.

"We listen to our corporate customers and ask what tools they want to see," Orcutt said. "At the same time, we're thinking about how to transition them from a desktop to a mobile phone for making payments decisions, and thinking about a future API-based model."

Transitioning commercial customers to this future requires education, as many businesses still are content to deal in check and cash out of habit, said Mary Burchette, senior vice president for product management at U.S. Bank Treasury Management.

"A lot of them have heard [about payments innovation] but don't understand the impact it has on back office processes," Burchette said of commercial clients. "We try to really work with them and dig into their processes and try and show them how they can benefit from more efficient payments processes."

Showing customers the benefit of approving payments conveniently from a mobile device, or using mobile payments for expenses and eliminating the need for saving paper receipts is a good way of showing off the technology, Jones said.

At the same time, not all customers need handholding — plenty are "more advanced" and are actively asking for more digital and mobile solutions, Jones said.

"Regardless of what form a payment comes in, we want to evolve with our customers and be a step ahead," he said.

That's a mindset all banks should have, as it will likely take coaxing from banks to their corporate customers to ensure the corporate payments world won't stay stuck in checks and cash forever, said Sam Maule, the head of digital and fintech for NTT Data Consulting.

"With large corporate clients, they are more readily adopting digital payments tools," he said. "But the real big opportunity is the small-to-midsized companies. Especially as fintech companies are looking to target small businesses with payments solutions. Banks do have to educate these companies on the benefits [of digital payment tools], they really need go deeper and define what the product is and how it can help them."

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