PYMNTS Intelligence: The Imperative to Improve Digital Banking for Business Clients

The pandemic’s repercussions have been challenging for businesses, particularly small to mid-sized businesses (SMBs).

A recent report from Ernst & Young found that 74% of small businesses have taken hits to revenue, profit margins and sales because of the pandemic, and 56% have had to rethink their business models to survive. One of the deeper impacts of the crisis has been on the way SMBs are engaging and interacting with their banks. 

During the past year, some 43% of SMBs have increased their usage of online banking services, and 40% have used more mobile banking. In keeping with this shift, 38% said they decreased their visits to branches and offices, and 24% reduced their use of ATMs. These trends are likely to continue as the growing adoption of card and mobile payments makes branch visits less necessary. 

Unfortunately, banks are not always keeping up with their clients’ changing needs. As the proliferation of FinTechs and embedded finance makes the financial provider market more competitive, it is more important than ever for financial institutions (FIs) to give their clients what they want or risk becoming irrelevant. The Ernst & Young report predicted that competition from FinTechs will cause 36% of SMBs to switch their financial providers at some point. 

This month, PYMNTS examines what businesses expect from their FIs and how important it is for banks to offer companies fast and seamless digital banking experiences. It also outlines some of the steps FIs can take to improve the services they provide their corporate clients during their digital transformations. 

Giving Corporate Clients What They Want

Perhaps business banking customers’ most pressing need is for comprehensive digital experiences with their banks. The same report found that 68% of SMBs are looking to manage as many aspects of their businesses via digital touch points as possible. More than half of SMBs expressed a wish for fully integrated digital platforms to support them in all facets of their businesses, including banking. Nearly one-quarter said they would be willing to access such integrated platforms through their banks, with 17% willing to pay for that ability. In time, SMBs are likely to expect these platforms as essential requirements of business banking. Banks that fail to build their own platform infrastructures could miss out on a significant revenue opportunity. 

This type of integration also helps fulfill the other digital banking prerequisites for SMBs: speed, security and efficiency. Low-cost, secure transactions that are as close to real time as possible are must-haves for SMBs working with limited cash flow. With the proliferation of application programming interfaces (APIs), open banking and embedded finance, shared information can mean quicker, more cost-effective service and seamless integration with existing systems. This data sharing also makes possible the personalization that businesses increasingly need and expect from their banks. A recent survey from Citizens Bank found that 82% of SMBs are at least moderately interested in sharing data with their banks if it permits a more tailored and improved experience. 

Excellent digital user experience is nonnegotiable, in fact. More than half of SMBs in the Ernst & Young study said it was “very” or “extremely” important for their banks to offer easy-to-use digital experiences. While nearly two-thirds of businesses were satisfied with their providers’ current experiences, just 19% said they were highly satisfied. Easy onboarding and responsive customer service are integral parts of that experience that could keep a prospect from going to the competition. More than two-thirds of United Kingdom SMBs in one report said if their business bank account provider cannot deliver better digital capabilities, they are likely to switch to another. 

Swift credit decision-making is also critical. About half of SMBs that received bank loans to help get them through the pandemic would have liked faster loan access, and nearly one-third wanted to receive those funds within three days. This level of support fits with businesses’ growing expectation that their banks will be fully invested partners in their pursuit of success. The Citizens Bank report found that more than 80% of business leaders said their banks supported them through the pandemic and that they see their bankers as strategic and financial partners. 

Above all, banks must clearly understand customers’ businesses to meet them where they are on their digitization journeys, making sure they feel valued and heard. This will often require a shift in focus from short- to long-term profitability for less digitally savvy businesses in transition. With so many choices on the banking market, successful banking relationships depend on whether or not banks decide to grow with their clients’ needs.