SunTrust's Twist on Fintech: Focus on Commercial Clients

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SunTrust is perhaps behind other banks in launching an effort to partner with fintech, but it is setting itself apart by focusing on partnerships that would help its commercial customers.

The $172 billion-asset company announced this month that it is launching a "payments and technology industry specialty" within its commercial and business banking unit. The Atlanta company's new unit will focus on discovering and advising fintech startups that are developing solutions in the commercial payments space, with the ultimate goal of finding new innovative solutions that may benefit SunTrust's commercial clients.

"Startups and established leaders need strategic financial advisers to help them meet their growth goals and plan for the unexpected – like regulatory and global challenges," said Eric Brewer, current head of treasury and payment solutions at SunTrust, who is moving to the commercial banking to lead the new specialty. As a bank, SunTrust needs to "keep an eye on the fintech disruptors as we look at ways to use technology in a more cost effective way."

Products and services for the retail customer tend to dominate fintech, but innovation specifically focused on commercial clients has been gaining traction within the banking industry recently.

"We're seeing some more movement and more interest in the needs of the commercial customer," said Nancy Atkinson, a senior analyst with Aite Group. She said SunTrust's initiative is emblematic of the trend and that she expects more commercial-specific units pop up. "We are going to continue to see interest in working with the fintech companies and building incubators in this space."

Some such areas of focus could include experimenting with blockchain for faster payments processing and using machine learning to parse remittance data more efficiently, Atkinson said.

Commercial payments are a particularly ripe area.

U.S. Bank late last year rolled out a mobile payments service for its commercial aviation clients. BNY Mellon, an exclusively commercial bank, has long been focused on payments innovation, even producing a wide-ranging report on the topic last October. Cleveland-based KeyCorp invested in several payments-related fintech companies last year after it surveyed commercial clients and found digitizing payments was a big pain point for them.

For SunTrust, the goal isn't necessarily to invest in or acquire fintech companies to formally bring into the bank, but that could be one definite outgrowth of the unit, Brewer said. It also doesn't hurt that SunTrust is based in Atlanta, which is a hub for payments technology.

"The ability to be able to tap into the rapid development happening in the fintech world is very attractive," Brewer said.

In addition to engaging with fintech companies, Brewer will act as an adviser to SunTrust's commercial banking relationship managers on utilizing technology to help their clients. SunTrust has previously developed these type of specialty units in its commercial banking division to learn more about things like aging services, health care, not-for-profits, government, education, restaurants, agribusiness and port logistics.

While exploring fintech is a start, banks need to embrace a cultural change if they want to bring innovation specifically to their corporate clients, said Ruth Razook, founder and chief executive of RLR Management Consulting, which advises banks on matters including technology.

"Banks also have to think about their own infrastructure, and their infrastructure and people tend to be more geared toward retail banking," Razook said. "I think the key is that banks need to make a big investment in talking to their corporate clients and trying to find out what they want and concentrate on building those platforms, instead of deciding what products and services they need and hoping they sign up."

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