Among all the ways to improve banking services, there’s no question that innovation must rank high up on the list because startups and technology providers are making a slow, steady and undeniably successful play for traditional business banking territory. As fintechs begin to siphon away business that includes payments, cash flow management, lending, analytics and even wealth management, banks have got to think long and hard about how they’re going to differentiate themselves if they stand any chance of maintaining and expanding their role of primary financial provider to the growing ranks of small-midsized businesses.
How they go about doing so is thankfully clear.
With 94% of small businesses in the U.S. using smartphones to conduct businesses1, its undeniable that longevity for banks will be found in the form of digital solutions, particularly ones that are easy-to-use and provide value to business struggling with payment processes and cash management.
4 ways to improve banking services
There are four main strategies bank can employ to stay ahead of the competition, starting with building from their core strength of payments.
42% of banking industry revenues come from payments2. New competitors in the market understand this and use it as a way to entice small-midsized business away from their banks. If banks fail to use innovation as a way to get themselves out of this problem, they will likely end up with just the transaction settlement portion of business – a big issue given the price and margin pressure issues that occurring as payment systems become more efficient. If banks view this as an opportunity however, they can leverage their mission critical role in payments to solve the broader issues that small-midsized business struggle with.
1: AT&T and Small Business & Entrepreneurship Council, “Small Business Technology Poll,”
2: McKinsey, Global Payments Report, October 2014