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Essential resources for banking executivesEnter ‘Banking Reinvented’

Revolutionizing business banking: the next frontier

Find out how you can quickly respond to the needs of underserved businesses with the power of progressive modernization.

by Jarno van Hurne

[Blog]-[Header Image]-[Revolutionizing business banking]-[EN]

Let’s start with the opportunity here.

All over the world, businesses are having the fight of their lives. Inflation and the rising cost of living have taken their toll, and these businesses are increasingly seeking loans to safeguard their very existence. From their perspective, times are tough. But from yours, things might just be looking up — both for you and for them.

According to a World Bank report, global small and medium-size enterprises have unmet financial needs of roughly $5.2 trillion a year. That’s roughly 1.5 times the current lending market for similar businesses. And that means you have an unprecedented chance to lend them a hand while also driving your bank’s revenue for years to come.

It’s a great opportunity, no mistake. But a word of caution — these businesses are already on the move or planning to make the jump to one of your competitors. And in many cases, once they settle down with a bank that meets their needs, your window will have closed. So the time to act is now, but also make sure you’re providing the right services to them at the right time.

But what does that mean? What are these businesses looking for in these uncertain times? Let’s take a look at three of their top requests.

Meeting the needs of SMEs

As I explained on stage at Backbase ENGAGE EMEA, businesses reject banks that force them to come into a branch, but simply tacking on a few digital channels isn’t enough. The smartest strategy? To combine the best aspects of human and digital service, allowing you to provide true omnichannel support. Every business has unique financial needs, and one-size-fits-all digital solutions don’t cut it anymore. They want a bank that can offer them personalized, proactive advice based on digital insights — but that also never loses the human touch. So make sure you give them the attention and services they’re looking for, including things like quick underwriting and CFO-as-a-service.

Secondly, these businesses are looking for a bank that can turn their data into actionable insights. At the top of their wishlist is a single, consolidated picture of their business activities and finances so they can make better decisions across their entire lifecycle. And in exchange, they’re willing to share more data with you, which means you’ll be poised to upsell and cross-sell to them at pivotal moments. By doing so, you’ll act as a trusted financial manager, something they’re desperately in need of, especially these days.

And last but not least, these groups want help running and growing their business. This is where you can really “wow” them with beyond-banking features that set you apart and create value-added experiences at every turn. By working alongside external service providers to create new offerings that suit their needs, you’ll open up new revenue streams — and greatly strengthen your relationship with your business customers.

It’s a tall order to meet all of their needs, but it’s not impossible if you use progressive modernization. Let’s take a quick look at this strategy so you can better understand its value — and how you can use it to win.

The power of progressive modernization

Progressive modernization is a strategic approach to upgrading key customer journeys in a gradual, iterative manner. Unlike a costly, inefficient “big bang” replacement, this strategy starts with the most important journeys, allowing you to modernize your underlying processes while mitigating risks and maximizing both customer and business value. You’ll be able to remain competitive while maintaining full operational stability, and that’s no small matter in this competitive market.

And your business customers are sure to notice. Progressive modernization is your chance to re-architect your customer journeys and create instant value, both for yourself and for them. And these businesses will settle for no less, especially with their dreams on the line. With a super-charged digital factory at your disposal, you’ll be ready to meet — and exceed — their demands.

But enough talk, let’s get started. Here’s our four-step process to revolutionize business banking.

Where to get started

Before you kick things off, you need to make sure your bank truly has the ambition to serve these businesses. Thus far, they’ve fallen through the cracks between retail and corporate banking, leaving them neglected and misunderstood. That means there’s no natural organizational home for them, so you’ll need to make the commitment to truly serve these businesses in the best possible way.

Next, you’ll want to define where you want to play. For example, businesses at the micro end of the segment share similar dynamics with affluent consumers, while larger ones have profiles and requirements more aligned with commercial or even corporate clients. And you’ll need to serve these groups in radically different ways, so make sure you create a strategy, or you’ll just end up delivering general, sub-par service that fails to meet their needs. As you know, one size does not fit all, so you’ll need to make strategic choices to best serve your target business segments.

Third, you’ll need to harness the power of a single, unified, omnichannel banking platform, which will give you a solid foundation to re-architect banking around your business customers. By using out-of-the-box platform capabilities and customer journeys, you’ll be able to cover up to 80% of what you need to build a modern mobile or web app, right on top of your core banking infrastructure. And once you’re up and running, you’ll be able to focus on creating value, rather than building basic functionalities from scratch. With the right tools and capabilities, you’ll be ready to serve these businesses well — and profitably.

And finally, once you’ve laid the groundwork, it will be time to get your hands dirty and begin your progressive modernization journey. In the past, many banks simply offered businesses repurposed versions of their consumer apps, and the response was generally about as negative as you’d expect. Instead, we recommend segmenting your client base and then prioritizing them based on things like the size or value of this segment. 

Doing so will allow you to progressively modernize the most critical customer journeys and deliver quick time to value. And better yet, you can even embed these journeys within your existing tech landscape, removing the need to completely overhaul your solution on day one. That makes segmentation and progressive modernization the best approach to digital transformation. You’ll be able to start small and keep both feet on the ground, so to speak, while greatly increasing your speed of innovation — a key part of meeting the needs of your business customers.

No one said digital transformation would be easy, but with a platform model, a progressive modernization strategy, and a best-in-class partner to help you pull things off, you’ll be delivering value to your business customers in no time. By creating seamless, customer-centric journeys, you’ll help them make better decisions for years to come — and that’s the kind of bank that wins customers for life. All you have to do is take the first step, but act fast. These businesses are waiting, but they won’t wait forever.