Banks Still Forcing SMBs To Go To Physical Branches, Says Avoka

Banks appear to be finally waking up to the need to innovate. Between the growing number of blockchain consortia, in which banks explore the use of distributed ledger technology, and the rising instance of partnerships between traditional and alternative financial service providers, it appears banks are making headway.

But a recent report from banking services firm Avoka suggests that when it comes to corporate banking, FIs are still far behind in providing online financial services.

The company’s second annual “State of Digital Sales in Banking” report explores the online offerings of top banks across North America, Europe and Australia. In examining one measure of how banks have adopted digital financial services — the ability to help customers open an account through a digital platform — consumer banking services are leading the way.

But, Avoka found, corporate banking offerings are lagging.

“It’s no surprise that personal banking products were the first to be readied for digital account opening,” the report stated. “But the more profitable product lines for banks are business banking and wealth management, and these continue to lag even further behind in 2017.”

In business banking, only 24 percent of products can be opened online, researchers found, and less than a tenth can be opened via mobile device.

“Considering how busy a small business owner is and how limited their schedule [is] to visit a bank branch, this severely undercuts the ability to banks to capitalize on the lucrative business banking segment,” Avoka stated in its report.

Researchers did note that this lag does present a significant opportunity for banks. Between 2016 and 2017, the percentage of small business banking products that can be opened via mobile devices rose just 2 percent, the data found.

North American banks are at the top of the race, with 11 percent of SMB services able to be opened via mobile device, compared with 9 percent in Australia and just 4 percent in Europe.

And while traditional FIs in these jurisdictions may not be paying enough attention to the small business customer, Avoka’s report did find that big banks are increasing their investments in digitization.

Two banks researched by Avoka for its “State of Digital Sales in Banking” report news that each saw a more than 30 percent improvement in their ability to sell products via mobile devices for their customers between 2016 and 2017. According to analysts, this suggests that investments in mobile capabilities are making a significant, and quick, impact on bank offerings.

“Evidence shows that banks are investing in digital capabilities, and even the largest institutions can change quickly when they get serious about digital sales readiness,” the report stated.

Yet other aspects of bank digitization need work.

Researchers found that banks’ omnichannel capabilities, for instance, continue to fall short, with very little progress having been made in their omnichannel account opening capabilities between 2016 and 2017.

Only a fifth of North American banks have enabled a save-and-resume feature for their potential clients, which lets customers save account opening progress on one channel and then switch to another to pick up where they left off. Perhaps more concerning is that there has been no change in North American banks’ offerings of save-and-resume features in the last year.

Avoka’s data suggests that banks have a ways to go before they can provide the level of digital service to their customers necessary to meet demand. Whether that’s enabling mobile account openings or omnichannel services, banks across jurisdictions lag in these capabilities. Only about a third of banks surveyed by Avoka have reached what the company describes as the “Digital Promised Land” — the minimum level of readiness for digital sales.

But Avoka’s data suggests SMB banking offerings fare even worse. While two-thirds of personal banking products ready for online sales, less than a quarter of wealth and business banking products can say the same.

“The good news,” Avoka concluded, “is that there are plenty of opportunities for banks to improve their digital sales capabilities.”