The pandemic has created a sense of urgency among corporates and small businesses to digitize, and financial workflows are no exception. Now unable to physically enter offices to cut checks and receive paper invoices, finance leaders have been forced to accelerate modernization efforts in order to keep business moving.
With organizations gradually settling into this new normal, chief financial officers and treasurers are waking up to the realization that forced digitization has actually opened up opportunities for financial optimization. Today, those realizations are translating into businesses shifting what they demand from their banking and FinTech partners.
Clayton Weir, co-founder and chief strategy officer at FISPAN, has been a vocal proponent of commercial banking innovation for years — and with the pandemic accelerating the modernization push, now is the time for financial institutions (FIs) to jump at the chance for a better business banking experience.
Speaking with PYMNTS, Weir discussed the evolution of contextual banking for the business end user, and why banks need to start thinking more like tech giants to provide financial services that solve real-world business problems.
As businesses’ financial services needs evolve, the look and feel of the banking experience must shift along with the changing market.
One of the most pressing demands among corporates is to bridge the gap between banking platforms and data, and other financial data in back-office portals like the enterprise resource planning (ERP) system. This forms the crux of contextual business banking, in which organizations can access bank details and perform banking tasks directly within the ERP.
To illustrate the opportunities banks now have to drive this evolution forward, Weir likened the rise of contextual business banking to the growing sophistication of communication technology. The historical silos that separated the ERP from banking in the back office can be compared to the low-fi, asynchronous nature of the fax machine. Eventually, the ability for banking and accounting systems to integrate data pushed the industry forward in the same way that dial-up internet advanced the digital communication landscape: better and more efficient, but still with room for improvement.
Today, just as the speed of the internet has unleashed a whole universe of opportunity to share and stream content and information, financial service providers are now positioned to facilitate embedded financial services that integrate a range of third-party features, all on a single platform. Not only is the gap between banking and ERP closed, but the two functions are intertwined for a far more efficient and flexible experience.
“When we talk about layering in third-party experiences, we’re really talking about the bank doing things for the business that you wouldn’t expect a bank to do,” said Weir. He pointed to intelligent, value-added services like automatic financing, actionable supplier payment insights and enhanced cash flow forecasting.
Think Like A Tech Giant
As a vocal advocate of business banking innovation, Weir isn’t shy about encouraging big banks to think like Big Tech.
The strategy is twofold. On the front end, explained Weir, thinking like a technology giant means solving customers’ biggest pain points. “What tech companies do well is get close to the customer,” he said. “They act like anthropologists, and understand your life and pain points and what you’re trying to get done.” FIs are increasingly adopting this mindset, but it’s “not native to their DNA” the way it is for technology firms, Weir added.
Meanwhile, on the back end, thinking like Big Tech means embracing the application programming interface (API) connectivity and data integration that provides the infrastructure for contextual business banking. For banks, this may initially mean taking advantage of the proprietary APIs that have been pre-built for past, special-purpose use cases.
But FIs can gain momentum in their API strategies by gradually making use of the API suites available to them within existing third-party applications. This is the point at which banks can elevate their commercial financial services strategy from one of mere connectivity to one of elevated integration and collaboration.
Driving The Future Of Business Banking
When banks take advantage of the technologies they already have in place, combined with the opportunities brought in by third-party collaborators, they position themselves to accelerate the advancement of the banking experience for their business customers in ways that are not only digital-native but are also embedded in a CFO’s or treasurer’s experience.
Take, for example, the opportunity of artificial intelligence (AI) and bots like Alexa. Remote working requirements have placed finance leaders in a new context of the workplace, and virtual assistant technology may be prime real estate for embedded banking. “The more time we spend at home, the more likely we’ll do B2B transaction via voice,” said Weir, predicting that virtual assistants via chat and voice will play a greater role in corporate banking in the future.
Whether embedding financial services within an ERP or integrating banking capabilities through Alexa, contextual business banking has a vast landscape in which to evolve as corporates embrace digitization. But it’s crucial that banks don’t innovate just for innovation’s sake. Rather, the banking experiences they curate through API integrations and FinTech collaborations must meet businesses where they are – and solve real-world problems – in order to add value.
The result, according to Weir, will be strengthened efficiencies in how businesses manage and move money. “We’re starting to talk about taking trillions of dollars of working capital flow because it’s easier and faster for us all to transact with each other as businesses. It allows us to invest in innovating and growing our business,” he said. “It’s just a better and happier world to live in.”