The right strategy and the right partners help banks modernize offerings to commercial customers securely, compliantly – and more quickly than with internal development projects.
Banks and businesses have a long history of partnership. Businesses rely on banks for essential needs, such as managing accounts, opening lines of credit, and offering payment options like ACH to their clients. However, in an increasingly digital world, banks have discovered that relationships with their business customers must change. For banks to compete, they need to modernize their operations and the services they offer.
Studies show that many banks recognize the need for change and are planning technology investments. A report from Cornerstone Advisors states that 63 percent of credit unions have deployed APIs and cloud computing, and 18 percent are developing digital transformation strategies in 2023. Additionally, 27 percent of banks are looking for new apps for commercial accounts. However, to get the most value from their investments, banks must first answer a few important questions.
Joining the “as a Service” economy
One of the first hurdles that banks must cross is shifting from legacy, on-premises technology to “as a Service” solutions. Banks need to see technology as more than tools for storage and data transfer. Technology can engage customers, help them meet consumer demands, and operate more efficiently.
Cloud-based solutions give banks the opportunity to provide their clients with new services such as online payment portals, mobile apps, payday apps, and unattended payments. Additionally, banks and credit unions can offer their commercial customers Terminal as a Service (TaaS). This model enables businesses to pay a monthly subscription for terminals rather than making a CAPEX for them. TaaS also includes device management, so merchants aren’t responsible for repairs and maintenance, and the cloud-based offering also includes remote support.
Overall, a shift in mindset about technology enables banks and credit unions to make the products they offer more user-friendly and to enhance user experiences with efficiency, speed, and convenience.
Build vs. Buy?
Another question that banks need to answer is whether they’ll develop their own solutions or partner with payment companies or fintechs to provide them. In-house development projects are major undertakings, requiring specific expertise in banking and payment systems – and significant investment. Development also takes time, which banks falling behind new market entrants may not have as commercial customers find more appealing offerings elsewhere.
On the other hand, banks have the option to partner to acquire new capabilities. For example, with a platform approach, only one integration is necessary to access all of the platform’s solutions and tools from a network of partners. A platform can enable merchants to offer alternative payments, value-added services like loyalty and gift card solutions, and operational tools like fraud prevention and analytics. Furthermore, banks gain centralized management, so they can tailor solutions to a segment of their client list or to key accounts. A platform approach also provides banks with agility so that they can quickly adapt to changing industry trends or consumer demands without having to install new infrastructure and develop new solutions.
The decision will impact how quickly a bank or credit union can modernize its processes and increase its competitiveness.
A Deliberate, Well-Planned Roadmap
Of course, speed hasn’t historically been the priority in the banking industry. Instead, minimizing risks and complying with each line of a law or standard are priorities. Fortunately, banks and credit unions can find experienced partners with the knowledge and skills to move an IT modernization project forward with security, privacy, and compliance paramount. A well-planned strategy and industry-leading partners won’t require compromising on those things – it will just help deploy solutions and reach goals for modernization and change more quickly.
But there’s one thing that doesn’t have to change: The relationships with commercial customers that banks have built their businesses on can remain as strong – or grow even stronger. When banks meet their needs for new payment methods, digital tools, and greater convenience, merchants will be more loyal and less likely to seek services from a competitor. Combining technology with personalized service can create an unbeatable plan or competitiveness in a changing world.