Accelerating Business Banking Growth and Optimizing the Customer Experience

Delve into the strategies and tools that can help you leverage digital solutions to drive business banking growth and enhance customer experience. Discover how digital transformation can streamline operations, improve customer engagement, and support your business objectives.


Transcription:

Sandra Horvath (00:11):

Hello everyone. Woo. This is bright. I'm Sandra Horvath, the Commercial Banking Market Strategist at FIS. And I will be speaking loudly because we're in an exhibit hall. So wave at me if you can't hear a little bit about me. So my background and my career journey has always been around a day in the life of a business user, and I've been very focused on what are the pain points for them and how is the financial services industry meeting those needs. So we'll be going through a few things today. Our agenda includes what business users are looking for from their banks, and then we'll transition into how the digital banking sector is responding to those needs. Then we'll also talk about expanding or enhancing the customer experience, some best practice around delivering that experience and best practice around growth and operations. So before I kick it off, I want to pose a question. How do you think we are doing as a community of banking providers and banks in servicing those end user businesses?

(01:24):

Well, based on a DTO survey, what I can tell you is there's more we can do. We are not hitting the ball out of the park as ERP integration. So we already have ERP integration. It's existed for many years. The difference is what level of ERP integration are we providing? What problems are we solving for? Do we have that deep insight and connectivity to serve those business users? One example is that the data that might flow into a bank for lending decisioning, one thing we've learned is that a majority of businesses are more than happy to give that data to their lender in order to make that process a lot easier. Looking at data out, there's also a lot of efficiencies that can be gained. There can be improved reconciliation, there can be improved visibility, better tracking of payments, and even money movement. Right? Within an ERP system, it's been deemed that the savings alone in the American market is approximately 60 billion in process savings for businesses of mid and larger size. If we are better able to tackle this piece, and when you look at it as a bank in that 60 billion of savings, when you provide those services that help them improve those processes and meet those savings, you can also charge for those services.

(03:19):

Next is tailored portals. What SMBs have told us is they don't want just a rebranded retail experience. They want a true business experience, one that they've seen larger companies have access to. The good news is that we could be providing that. Some examples include a portal environment where they can run the reports that they want. They can see the cash flows. So cashflow forecasting tools in order to know that when they're going to need cash, for example, in today's tariff environment, many of these businesses are having to come up with cash quickly in order to make those payments. So there's an example where cashflow forecasting is very, very important.

(04:00):

Moving on to payables and receivables. This is another space where businesses are paying more attention and it's really coming down market. So 50% of businesses are looking at automated payables and receivables solutions. And of those businesses, a bulk of them are applying an implementation of those solutions in the next couple years. So once again, we're seeing the automation has taken place with larger businesses, but these smaller businesses want to seat at the table and what this functionality as well. And finally, real time. So instant payments has been out there for a while. There's the rollout of Fed Now, which creates new opportunities for banks. What we're seeing is that businesses have been left in the dark a little bit in the past. Real-time payments has been far more consumer focused, but businesses are starting to look at new use cases where they can use RTP and Fed Now within their businesses. In response to this, majority of banks are investing heavily in this space and they're looking at these expanded use cases. They're also having to look at the back office from a modernization perspective. One example of this is they can offer multiple payment methods, be able to manage that in the backend, and ideally give them recommendations about which payment method makes the most sense for that particular transaction.

(05:29):

So to wrap it up, I posed the question, how can we get back the mind share of these businesses? We know that a bulk of businesses are currently working with a FinTech in one way, shape, or form, and they're going around their banks to do it. I mean, it's not to say there isn't the space for fintechs, but you want to be collaborating with them or offering similar products and services that go beyond just the basic transactional banking. So the migration has started, and the risk is that we need to get the attention back from those businesses. And the businesses are telling us they want these ancillary services from their banks. They want to deal with a bank that is a trusted advisor, that is secure, that is a stable that they can deal with to get these services. And banks need to realize there are rising expectations.

(06:20):

They can get the solutions from a lot of places in the market, and they're also working with big tech firms that give them an experience that they're used to and they want to see that from their banks. And finally, to wrap it up, the good news is the technology is available for smaller banks. We can now access the capabilities that have normally been reserved for only the largest fis. So the more that you offer to these businesses, the more you're engaged with them, the happier those businesses are. And with that, I'm going to pass it over to Blaise Macneil, my colleague.

Blaise Macneil (06:59):

I'll go this one. Thanks. Thank you, Sandra. Good morning everyone. Sandra said, I'm Blaise Macneil. I have responsibility for the digital business banking segment. Thank you, Shane. The digital business banking segment at FISI come to this game with a long career in banking, in the business banking space. So I've had the great opportunity to spend lots of time in the banking world and with customers. So I'm going to go through relatively quickly and we'd be happy to talk further with anybody, questions and stuff. But what trends do we see? And then my colleague, Jim Gilles, we'll talk about, okay, what are we doing about it? So there's four or five, maybe six I guess themes here. The first and foremost, one that's probably most important for all of us collectively, given that we all want to grow and do better, is there's an opportunity out there for continued digital growth, right?

(07:55):

The growth in digital usage, utilization, revenue, whatever you want to call it, is expected to be well into the double digits for the next kind of five, seven years. And particularly in the business banking segment, the velocity of that growth is increasing. Businesses are looking to do even more digital activities or interaction with their bank. Mobile, mobile, mobile. Again, particularly small business segment, if you don't have a robust, strong mobile offering to offer to your small business customers, that's going to be a problem, right? It's already a problem today. It's going to be even more of a problem going forward. The difference, of course in business banking mobile is there's the two platform challenge, right? It's phone and tablet, but that's a key consideration. Digital more and more is becoming a determining factor in when a business chooses to set up a relationship with a bank.

(08:57):

Obviously, credit deposit, product capability, all of those sorts of things are critical relationship. But digital is, we see it in the interactions we have with our customers. We hear it more and more about the importance of digital in somebody making decision to switch banks, fraud, fraud, fraud, fraud, fraud, more fraud. Anybody here has not experienced fraud in the last probably even six months, I'd be very surprised. But fraud is a big theme. And the embedding of risk mitigation, anti-fraud capabilities into these platforms, these digital platforms has become table stakes. It's no longer kind of an optional piece. Senator mentioned earlier the idea of portals, marketplaces, making capabilities available to your customers across a broad range of services. And then last but not least, is open banking. I mean, the world of open banking is here. It's very prevalent, obviously, in the consumer space, but I'm sure every single one of you that work for banks here are hearing from your business customers about they want to connect to ERPs, they want to be able to initiate payments from a workflow or SAP platform.

(10:09):

This kind of two-way flow of information, it's here. And the open banking is just, we consider it, and I would encourage all of you to consider it as well. It's just yet another channel option. So started out in the online world, progress to mobile, and now the third channel, if you will, is the open banking channel where your customers are connecting to different platforms. So customer experience is really important or critical element of all of this user experience. I think we all know, right user. We're not being measured by the bank next door. We're being measured by the latest, coolest jazziest, apple or Google app that somebody has downloaded from the app store. That's the experience comparison that's going on workflows. And so these three things, workflows, personalized experiences and identity management are absolutely critical in the business banking space. I mean, obviously they're important in the consumer space as well, but efficiency is a huge play in the world of business banking as we all know.

(11:19):

So for somebody to be able to efficiently do their task or their job, whether that's the small business owner manager trying to do a task once or twice or three times a week, or what I refer to as the power user wire person in a title company sending out 150 wires a day, they need to be able to do whatever they're doing very efficiently, and they need to be able to do it with one identity across different services across different platforms. So going back to my online mobile open banking world, the whole identity management piece has to flow smoothly. It has to be secure, fraudsters of course, but it also has to be efficient. So as you think about how your customers interact with the various digital services you provide, think first and foremost about how do you manage their identities? How do you actually make it easy for them in a secure way to access the services that you provide?

(12:15):

And then the last piece about, so this is a bit about the previous two slides, were more about the what do we see in the market? What's happening out there? How do you increase engagement? So I have a large portfolio of banks that I have responsibility for. I hear from them every single day. I have a chance to talk to research analysts. I read a lot of stuff, obviously, as you all do. But there are kind of three or four different themes here to actually create stickiness. So business engagement, stickiness, retention, loyalty, whatever you want to call it, right? But how do you ensure that those high value business customers stay with your organization and continue to grow and continue to utilize more and more services, particularly digital services. So things like account aggregation, we hear all the time from research, particularly small businesses, they want all their information in one spot.

(13:12):

So if you've got customers, particularly in this diverse market, it's not uncommon for businesses to have accounts at more than one bank. So find ways to aggregate or pull in all of that data. So aggregation, inbound aggregation is obviously a component, but it's kind of the opposite of open banking. Instead of your customers pushing data out, you want to be bringing data from other banks in so that your customers have a full 360 view of what they have. From a financial services perspective, aggregation is a really, really important piece. Business cashflow insights, again, particularly important to this small business segment. How do you help your customers pull all of their financial data, all of their payments information, all of their receivables, their payables, all of that stuff. We all know that cashflow is king. You can't do anything in a business without cash, but most businesses really struggle, small businesses in particular, to actually find ways to have a good handle on their cashflow.

(14:18):

So enabling them to see their cashflow is really important. Third party connectivity, again, tapping into that broader FinTech ecosystem, there are thousands of fintechs out there already that your customers are using, many of them. So the idea here is how do you make it easy for them to access those services through your bank so that you become front and center in that relationship? You maintain point of prominence in the relationship and you bring this broader ecosystem of FinTech connectivity to your customers. And then last but not least, and we're seeing this more and more often, specialization. You got to get better. We all collectively have to get better at really making the small business owner, manager, wire person, whatever it is, all the spectrum of customers, make them feel that we all collectively know and understand them. We understand the industries in which they operate.

(15:11):

We're able to provide them with services delivered digitally, things that make sense for them in their particular role in their particular industry. We think that this is the next evolution connectivity and this insight data piece is we're there now personification, role-based specialization. We are already seeing banks that are developing this at the sales level and at the kind of people management level, digital is the next evolution of that to be able to deliver that kind of specialized experience to customers that are operating in particular segments. So that's kind of like what we see happening in the world. And then my colleague, Jim, is going to talk about what we see from a product perspective. So thanks for your time today.

Jim Gillespie (16:06):

Good morning. As I said, my name is Jim Gillespie. I recently joined my colleagues at FIS Late last fall. I was with a company called Dragonfly Financial Technologies. We provide digital business banking and cash management skewed towards the larger technology and capabilities for larger financial institutions. And so we're added into the digital and open banking team at FIS just about six months ago. So appreciate a chance to talk a little bit about some of the things we're seeing in that segment of the market. We talk about self-servicing. This is something that's really important, not just for the banks, but for the customers as well. They actually want it. Small business needs. Many prefer to take care of things themselves, but it's critical from a cost of delivery standpoint. The pricing pressures, profitability pressures on small business demand that there's a digital capability. Accounting, same thing. Accounting is no longer manual. It used to be okay to have multiple steps to go to the bank or multiple banks. The expectation from corporate customers has evolved very, very quickly that things like reconciliation just need to be push of a button and I need to move on and get to the rest of my day as an accounting person or a business customer of the bank. I think most importantly though is the insights. And I use an example here, I think that works for me. Does anybody still do Wordle?

(17:51):

Okay, you and I, so I do the Wordle every day, just about every day and something. It is a New York Times game. You have five or six guesses to get a five letter word correct, and you can only do it once a day, so you can't obsess with it. They added something called a word of bot, and they put an AI component into it. A couple of, I dunno, weeks or months ago. And I clicked on it and it said that my second guess was rated at 86% of quality of the guess. I dunno what that means, but I do know that the average user was at 82%. So I was above average. That's kind of the person I am. What I found. Then the next day I wanted to know how I did, and they said that's a dollar 50 a month. So I bought it because I wanted to make sure I was above average.

(18:45):

And it said things like, boy, that guess was very predictive for your next guess because you used up all the vowels and you knew which vowels were still available or something like that. And funny thing happened, it actually made me a better wordle player with Selfer, with AI and a bot that they put in Wordle in a little game. Now my wife and I have a little small business. We do vacation rentals. And I could tell you if my bank offered me data comparing me to other vacation rentals in my area and in various financial measures, I'd pay a dollar 50. I'd pay more than a dollar 50 a month for that. I'd want to know if I was below average or above average. For me, that's the holy grail of automation that we need to aspire to as digital providers for our customers.

(19:45):

Bank operations had a conversation at our user conference a couple of weeks ago with a couple of heads of cash management operations. And consistently they talked about being able to grow the bank without growing their expense base, performing more operation more transactions, servicing more customers with the same expense base as their bank was growing organically and inorganically and buying banks. You have to be able to scale volume without adding costs. Onboarding. There's been a number of different studies that have shown very conclusively the number one driver, the most influential factor in a cash management customer or bank's satisfaction with the bank and with their digital services is the onboarding process. If it's bad, it's really bad. If it's good, they appreciate it. It drives their customer satisfaction and it needs to be automated. It needs to be like that process of when you apply for a mortgage and every step of the way, it's communicating proactively, keeping them posted, reminding them that they owe documents and giving them a dashboard or a yardstick of the progress so they know how far they are and when they'll be done.

(21:08):

APIs critical for bank operations as well. We have to connect the systems and eliminate the people and the manual processes, the manual processes that we need people to operate. That's a scale issue. That's an efficiency issue. That's a quality issue. Manual processes are where things break. APIs are a very, very important tool for streamlining bank operations. And finally, the other point I would make is training. Your customers don't want to have, our customers don't want to have to call us for help. They want to be able to solve their problems themselves. And there are a lot of new tools available that we can deploy to improve that and automate that training and make that self-service a reality bank growth. It's funny, I mentioned a recent conference. We gave a somewhat similar presentation. We spent a lot of time about on the importance of digital banking in driving growth and how it's important for all of us, I assume, at an American Banker digital banking conference that that is, that's assumed stipulated. So I won't belabor that, but I'll just tell a quick little story.

(22:28):

I guess it's about two years ago now. We had a liquidity crisis in a couple of banks in a bank run, and I think we had a dragonfly. We had a front row seat to some of those. And one of the things I like to point out is that it was actually a pretty impressive time for digital banking. The digital banking system was highly resilient. We saw four and five times the normal sessions on our digital platforms at some of the impacted banks, and we saw incredibly large orders of magnitude, larger wire volume that we would even see at the end of the quarter. And the systems worked well, and that's good. And I think as an industry, we should be proud of where we come because there was a time in the earlier days where that kind of volume would've put us on the front page of American Banker.

(23:27):

But we also learned that customers in the digital banking world are portable. One of those banks, a San Francisco based bank, was on our platform, was a well-known, very, very solid digital bank. And as those customers move to other banks, I've talked to numerous banks about the expectations that those users have and they're still portable. I would leave you when we talk about bank growth is that's a two-way street. There's a risk and a reward with digital capabilities and the user experience and that a customer has when they come to our banks and engage with us on the digital site, probably more so than the people, their expectations are high, and the reward for meeting those expectations is growth. So I think we've left ourselves just a minute or to invite my colleagues back. If there are any questions or comments or discussion, I think we can run around with a microphone or ask you to shout over the din either way, if there's any questions or comments from the audience. Yes, sir. Oh, great.

Audience Member 1 (24:47):

You mentioned some of the difficulties around mastering identity management and was wondering if you could talk about some of the challenges and also best practices for addressing those in the business banking context.

Blaise Macneil (25:08):

So I think the fundamental problem with this, particularly in the small business space where you have a user who is an owner and also a consumer customer of the bank, and historically different identities, different limits, entitlements management. So I think what the problem that we are working at FIS to solve is how do you create one identity across different services across different channels? And as you move up market, it becomes even more problematic because then you have a user that says, oh, for the bank's lockbox service, I have this identity for the remote deposit capture, I have that identity, et cetera, et cetera, et cetera. So coming back to the idea of portals, right? One identity management, one set of credentials. That may be a whole mess in the background that proverbial spaghetti wire, if you will. But from the user's perspective and also from a security perspective, it makes it really hard to do an adequate job of security if you're trying to go against all these different things.

(26:17):

So before you even get in the door, we know who you are and then we decide who the service is. So really it's kind of twofold challenge. It's that bleeding the experience across different segments. And then the second piece would be bleeding the authentication experience across different products and services. Portals is the answer to the second piece and one common credential. And I would also say one kind of thread to this as well, it's not just the username and password that has to travel. It's my history, it's my templates, it's my report customized, all the things that I've done, all of that. The actual identity piece is only one, maybe one fifth, if you will, of all of these pieces. So you have to create this common kind of identity and package that travels with across all these different services.

(27:17):

Any other questions? And by the way, the reason why this is so important goes back to my point about, and I think you've hit it, we're being compared to Apple and Google, and that is what the experience is in Apple and Google, your music to your videos, all that stuff. It's all one thing. So that's why it's so critical. Do we have any other questions? No, I think we're at time. So first of all, on behalf of my colleagues, thank you all very much, guys. Appreciate your attendance here this morning and hope you enjoy the rest of the conference. And thank you to American Banker for sponsoring this and having us here. So appreciate it.