Small Business Digital Banking Needs Best Served With ‘a la carte’ Services Powered by APIs

Small- to medium-sized businesses (SMBs) were hit particularly hard by the pandemic. Growth within this sector continued despite the economic strain — one report found that 32% more SMBs were formed globally in 2020 than in 2019. Such companies therefore occupy a significant place in the world economy, but one lingering impact of the health crisis upon such firms is how they want and expect to conduct their financial operations.

What SMBs expect from their financial institutions (FIs) has continued to shift in the past few years, with more and more mid-market companies seeking out banking and payment features that allow them to move money more swiftly. This means legacy FIs especially must take immediate steps to ensure they are offering their SMB clients access to the seamless, digital-first tools they are looking for to keep their attention and loyalty.

In the latest Next-Gen Commercial Banking Tracker®, PYMNTS examines how the global health crisis has shifted SMBs’ payment and financial needs. It also looks at how tapping technologies such as application programming interfaces (APIs) can help legacy FIs keep pace with these shifts and retain mid-market companies’ loyalty.

Around the Corporate Banking World  

Legacy banks are moving swiftly to ensure they can match the changing needs of their increasingly digital-first SMB and other business clients. British FI HSBC stated the bank would invest $2 billion into digital transformation efforts in the next five years. The FI will also work to expand its current partnerships with FinTechs and other financial players during that time. The fund will go toward helping the FI optimize its digital banking features for both SMBs and its other business customers in the hopes that these newly innovated digital tools will allow them to foster lasting loyalty among these clients.

Legacy banks appear to have retained SMBs’ trust thus far, with one study finding 91% of SMBs in the United Kingdom stated they trust their current FIs to handle their business banking needs. Yet mid-market companies are still reporting frictions inside of their financial relationships, with one out of every nine SMBs stating they have faced a variety of challenges with their current banking experiences. The report found 37% of SMBs have submitted complaints to their banks without receiving satisfactory responses, something that could provide their FIs’ competitors with a key opportunity to swoop in and claim their business. Figuring out how to keep the banking experience seamless and personalized is therefore key for legacy banks.

For more on these and other stories, visit the Tracker’s News & Trends.

How Legacy FIs Can Innovate Their Business Banking Offerings to Keep SMBs Loyal

Historically, SMBs are often underserved by the financial industry. The pandemic’s impacts upon the financial space have led a rising number of FIs — including FinTechs, notably — to take a closer look at mid-market companies, especially pressuring legacy banks to offer the same speedy business banking experiences as their digital-first competitors. Innovating their banking experiences to keep the loyalty of their SMB customers is therefore key, explained Kelly Burdette, senior vice president of Digital and Product at Bank Independent.

To learn more about how legacy banks must innovate their financial features to better appeal to today’s SMBs, visit the Tracker’s Feature Story.

Deep Dive: How APIs Can Help FIs Meet the Shifting Needs of Today’s SMBs

The pandemic rapidly shifted SMBs’ needs and expectations for their FIs, with many searching for banks that allow them to send and receive payments as quickly as possible to keep their operations running successfully in an increasingly virtual world. This makes providing seamless, convenient access to digital-first banking tools essential for FIs that wish to engage and retain their SMB clients — but this means banks must work quickly to adapt many of their offerings to match the shifting needs of these businesses.

To find out more about how the banking wants and needs of SMBs are changing and why adopting technologies such as APIs can help FIs to capture their loyalty during these changes, visit the Tracker’s Deep Dive.

About the Tracker

The Next-Gen Commercial Banking Tracker®, done in collaboration with FISPAN, examines the latest corporate banking trends, including how businesses’ financial and payment needs are shifting and why. It also analyzes what technologies and tools could help FIs to grow the loyalty and engagement of their corporate clients.