Why business banking should ride the wave of digitization

Despite accounting for around $850 billion of annual revenue for banks, the business banking sector is typically an underserved market for supporting the management of customers’ financial needs. The ongoing COVID-19 pandemic has had a huge impact on small and medium enterprises, driving many to quickly adapt to new business models supported by digital channels on a single platform There are three key reasons business banking needs to innovate quickly and leverage opportunities from digitalization.

Shifting demands in transactional banking

The nature of trade is constantly evolving due to improved technology and the rise of e-commerce. This means business banking customers expect more from their financial providers to meet their digital needs. A recent study by Ernst & Young found that more than half of SMEs in Singapore were willing to access progressive offerings, beyond core financial products, from their financial service providers. The study also highlighted that SMEs in the region were more likely to consider switching their main financial services provider compared to their global peers – highlighting a gap between current bank offerings and the needs of business clients.

Pranav Seth, Chief Digital Officer at Techcombank, recently shared in a fireside chat that unlike technology partners and emerging players who are still finetuning their profitability – banks are well poised to grapple with the shifting demands of their clients by investing in digital technologies that support personalization.

Techcombank Chief Digital Officer Pranav Seth shares his insights on the bank’s digital
transformation journey

Creating seamless customer journeys

The advancement of digital tools and technologies allows banks to implement smarter,more intuitive customer journeys that fulfil their business clients’ expectations.

At Backbase, we’ve identified five main needs of SMEs when it comes to their financial needs. These include;

  • Easy and fast onboarding
  • Fast and quick loan applications that assist ingrowing their business
  • Online payment solutions to optimize cost-effectiveness
  • Improved speed and cash flow
  • A personal adviser to help manage the business

In a recent discussion with YES Bank Global Head for Transaction Banking, Ajay Rajan, we uncovered the key differentiating factors in beating the competition in business banking.

Together with YES Bank Global Head for Transaction Banking Ajay Rajan, we discussed the
outlook for India’s business banking landscape and its opportunities here.

It’s not surprising that emerging technology providers and big tech companies have started to introduce new customer propositions and better service models to revolutionize the SME banking industry.

To bridge this gap, the Backbase Engagement Banking Platform has allowed financial institutions to offer SME clients a place where they can get a comprehensive and holistic overview of their finances, manage them easily, and have access to tailored products and fast onboarding.

For instance, we’ve recently renewed our partnership with Metro Bank, a leading UK retail and commercial challenger bank, to provide off-the-shelf accelerators for business banking. This offering allowed Metro Bank to build personalized digital offerings to meet their clients’ demands.

As my colleague, Pim Koorn, Backbase Director of Business Banking, aptly shared in his article on winning over SME customers, banks have to re-architect their thinking to address their clients’ pain points and focus on growing their business.

Driving higher revenues and reduced operational costs

Digitalization has been a key enabler in opening doors to newer business models and increased process efficiency. By prioritizing the right technology, banks can quickly identify and define the right solutions to help their corporate clients grow their business.

In the case of Mauritius Commercial Bank (MCB), their cost of serving corporate customers was relatively high as they were still largely dependent on branch operations. However, as their customers progressed digitally, there was a demand for a secure way of banking that was seamless and unfragmented.

Hear from MCB on how they managed to launch an SME app in just six months.

Leveraging the Backbase Engagement Banking Platform, MCB fast-tracked much of its product offerings and customer experience through out-of-the-box widgets. From this, MCB achieved a minimum viable product for its new banking app in less than six months. Similarly, 85% of users who have downloaded the app actively use it – signing in around 14 times a month.

The advent of digitalization creates boundless opportunities for banks to fine-tune their engagement strategies to improve the overall customer experience. By reimagining business banking processes through curated customer journeys and investing in the right technologies and partners, financial institutions can benefit from quicker go-to-market speeds for new products and services, while upselling products.

Having the right digital technology such as the Backbase Engagement Banking Platform, allows banks to upgrade their customer service while reducing operational costs in areas such as onboarding of accounts, origination process of loans, card replacements, and pin resets.

As businesses respond to the changing marketing conditions, banks too must continuously adapt and provide a tailored experience that helps support their clients in growing their businesses. Banks that can re-architect their thinking and take the steps needed to capitalize on these trends will succeed in increasing their return on investment in the digital engagement banking era.


About The Author

Riddhi Dutta is the Regional Head for ASEAN & India at Backbase.

Riddhi oversees Backbase’s sales and go-to-market success for his territory in Asia Pacific. He helps financial institutions turn their digital ambitions into reality, helping them with designing digital transformation initiatives which are feasible, tailored, and creative with instant business value.

Riddhi has an excellent track record of championing legacy modernisation initiatives in several banks across the region, where he consulted and helped banks move to open banking platforms, including modern core banking and treasury solutions. Prior to joining Backbase, Riddhi held several senior roles at Infosys Finacle, Fintellix Solutions and ITC Infotech.

Riddhi earned a Masters of Business Administration in Marketing and Systems from the University of Delhi.

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