How digital banking can find a new competitive level

When it comes to digital banking for businesses, the numbers don’t lie. When Bottomline asked a sample of global banks last year about their top competitive priorities, digital transformation topped the list by a substantial margin at 64%.

But what exactly do commercial banks want from digital banking? That answer is not as clear, with real-time payments leading the way for some and automation for payables and receivables leading for others. Other research shows that many CFOs think digitalization is primarily about automation and efficiency.

Digital banking is a competitive necessity for a satisfactory customer experience. Businesses of all sizes and verticals will need to step up eventually if they haven’t already. While it’s hard to get a bead on the percentage of businesses that are fully digital, digital banking is approaching critical mass for consumers—according to PwC, 61% of consumers now interact with some form of digital banking every week.

To explore the best ways to compete on digital business payments, we spoke with Paul Savage, Bottomline’s senior vice president of sales and customer development.

Q: Paul, do we still need to make a business case for digital business banking?

Paul Savage: I think the banks know they need to have a strong digital banking presence. Some of them still are using very old systems that are not very easy to use. And they’re really at a disadvantage because businesses are expecting their bank to mimic the experiences they have as consumers, which is intuitive and easy. I don’t know if some banks appreciate that older systems can create a flight risk for their commercial customers.

It seems like everything researched and written on the topic connects the need for digital banking to small and midsize businesses. Are we overindexing there?

Absolutely not. Small and midsize businesses are a forgotten stepchild in the sense that systems have typically been built for two ends of the banking spectrum. They’ve been built for the sophisticated, bigger businesses, and they’ve been built for consumers. But SMBs typically have had a choice. They could either use the more complicated system, which often is just too complicated for them, or they could use the consumer system, which doesn’t provide enough capability. So providing SMBs with capabilities that are sufficiently easy to use and intuitive—and at the same time have a scale that matches their requirements—is a critical need for banks.

We have also been hearing more about two trends: the need for data and the need to balance human and digital experiences. Are those underrated features of digital banking?

I’m not sure if they’re underrated, but they’re certainly significant. Banks can use the data from digital banking to measure baseline trends and predict churn. However, and this speaks to the balance of human and digital experiences, a lot of times what the user needs is the intervention of an expert. For example, businesses can open a new account online, but the abandonment rate on that is huge. So if the bank could have expert guidance available on demand—something more than just live chat—the human touch would complement digital.

We saw a survey recently that showed banks are concerned about the financial as well as personnel resources necessary to maintain a digital platform. Do you see that as being a significant obstacle?

It depends on the bank, but yes, it could be an obstacle. That’s where a partner is important. All companies, in a sense, are strapped for technology resources, but there’s no reason why the banks cannot avail themselves of the expertise that’s available in the market. That’s why selecting the right digital banking provider is so critical. Banks need a partner who has the client focus and expertise to help them successfully launch and grow their platform over time—someone who has a track record of success.

How can commercial digital banking teams that have made a lot of progress toward integrating their platform take it to another level? What could they do better?

I’d say one of the biggest returns is on providing a solution that’s tailored to the needs of small and medium-sized businesses and that is intuitive and straightforward. And that doesn’t require a degree in technology to use and has sufficient capabilities to meet businesses’ needs. So again, a solution that’s purpose-built and built to the scale of the requirements of a small business. That’s a big opportunity for banks, in my opinion.

Dan Peacock is vice president for banking solutions marketing at Bottomline.

Explore digital banking topics to help you build your plans for 2023 and beyond with insights from leaders in the trenches and valuable BAI research in the BAI Executive Report, Plotting the future of digital banking