Best in class: Bottomline’s Kevin Pettet and Jessica Cheney on digital banking’s future

Awards and accolades are a welcome occasion in the digital banking business. Bottomline received a big one recently that not only encourages our team but shows that our hard work to build an excellent suite of products for business banking customers is resonating in the marketplace. 

The award I’m referring to is Aite-Novarica’s best-in-class recognition for our cash management solution, which is known as Digital Banking IQ. Among the differentiating factors we were recognized for: creating a “deeper” payment ecosystem and addressing the expanded business requirements of our customers. But that’s not where this report begins and ends for me. The analyst team at Aite did a masterful job of identifying some of the more impactful market trends in this space, and that section of the report merits close attention.  Jessica Cheney, our VP of digital banking solutions and head of product management and I sat down with our editorial team here at Bottomline to discuss the report and its implications. 

Q:  Kevin, Aite-Novarica has reported that only 23% of businesses believe their financial institutions fully meet their cash/treasury management or payment capability needs, saying they’re looking to their technology providers to help them address new market needs and expectations. In your view what are those new needs and expectations?  

Kevin Pettet: Our customers expect us to deliver robust capabilities with a frictionless digital experience. They in turn are expected to deliver that same experience across multiple customer segments – small business, mid-sized, commercial and corporate.  I think it’s important to understand that customer needs across these segments can differ greatly. I’ll give you an example: small business customers are often underserved on traditional retail banking/ consumer platforms and can be equally overwhelmed with the complexity of a commercial platform. These customers need simple and intuitive user experiences that fulfill their payment needs and which integrate with their accounting package so they can easily run their businesses.  Similarly, commercial and corporate customers typically have multiple banking relationships and need to have a clear view of their cash positions across these relationships. The best technology providers are closing these gaps by partnering with one another and leveraging APIs to extend their offerings to better address evolving customer needs such as payment hubs, ERP and accounting integrations and cash forecasting. In doing so we create new value propositions for banks to provide to their customers. 

Jessica Cheney: Just to reinforce a couple of Kevin’s points, I see banks looking for that multi-bank reporting and treasury capabilities, which provide one solution that meets the needs of any business regardless of size. And those partnerships he mentioned are very important in expanding our offerings. For example, we’ve integrated Autobooks for smaller business usage and we’ve integrated our own Paymode-X business payments network to scale up to meet the payments needs of enterprise level businesses.   

 Q: The report also calls out several market trends. The first has to do with “digitizing the bank” and the importance of unique user interfaces. Have you found that the user interface (UI) can contribute to a unique value proposition in digital banking?

Pettet: It very much can because banks are looking to create a unique user experience through deep UI-level integration that enables a common look and feel across the bank’s entire platform. That’s in contrast to providing a solution where various modules look completely different from one another leaving the end customer feeling like their bank’s platform is a hodge-podge of various vendor offerings. I think our platform is well-positioned here given its deployment flexibility. It can be the portal; it can be deployed as a white-labeled solution under the bank’s portal, or it can be deep-linked into from the portal.  We also accommodate banks who would like to own the full user experience. They can use our application in a ‘headless’ manner where we provide the payments and reporting functionality, and the bank utilizes our APIs as the basis for building the user interface.  

 Q: What would a UI-based unique value proposition look like in action?

Pettet: Well for example, our real-time payments module has a patented user experience for exchanging messages when making or requesting payments between the payor and payee in a conversational chat-like format that mobile phone users have become accustomed to. We are currently extending our real-time payments functionality to include FedNow in addition to The Clearing House’s RTP platform. Ultimately, this chat-like user experience becomes a more and more important differentiator for our banks as real-time payments become more mainstream. 

Q: Jessica were you surprised that the report placed so much weight on the user interface?

Cheney: I think this all comes down to providing frictionless experiences. That's why having one look and feel across multiple applications is so important. From a user experience perspective, it gets back to customization. For example, some corporates today want to go into the web application. Others want to stay within their ERP and have the banking information brought to them. The ERP is their user experience. Others want to have that experience via an API integration. So, although the market trend as they’ve identified says “UI,” for me it maps back to the individual and the unique user experience.

Q: The importance of APIs shows up in several places in the Aite report. What do you think the move to APIs has done for banks and what are the jobs left to do?  

Pettet: I think APIs enable banks to collaborate directly or collaborate via their commercial online banking vendor with fintechs to create new value propositions and drive innovation. The Aite report also mentions fintech collaboration and partnerships in several instances, which is basically what I am talking about. This type of API collaboration is important because commercial customers would prefer to have their needs fulfilled by the bank whom they know and trust, while in parallel fintechs can help banks provide the digital features and capabilities their customers are expecting.  

Cheney: Here’s my favorite tagline when people talk about API's: What’s the use case? ‘API’ has become way too generic of a concept now, so you have to peel back the onion to show those specific use cases. I also think that the bigger challenge is that banks don't know how to monetize an API channel yet. And we need to start to fulfill on value-added uses of those APIs in order for them to figure out how to monetize any of this. Now what we've started to do is to provide access to APIs that help them create that monetization capability. Give them reasons to use APIs to build new modules themselves, so that they can come up with new things to sell.

Q: Jessica, the report also addresses real-time payments, which has been part of your remit for some time now, including your work with the Fed in developing FedNow. The Aite report encourages banks to not think of real-time payments as simply a new payment method but rather as part of a larger, integrated payments offering. Sounds good in theory, but what does that look like in practice?

Cheney: Well, it’s about liquidity, which is very important to everybody right now.  I have talked to a CFO who posed the question: Why would I want to make a payment faster? I want to hold on to these funds as long as possible. This exchange highlights that the value of real-time payments as a part of a liquidity management strategy is not fully understood.  It’s important to understand that speed on its own does not make a value proposition. Real-time payments allow you to wait until the absolute last minute and then still make the payment on time. You don't make it faster because you want to pay 10 days early. You make a faster payment because you want to pay it on the last possible day and use that as a liquidity tool. Real-time payments are not a strategy unto itself. It is part of a comprehensive liquidity management capability that also features straight through processing that results from the rich remittance information that can follow with those payments. 

Q: Kevin, back to you. In several instances the report calls for tighter, broader integration with fintechs. How does Bottomline facilitate that, and do you find that banks are looking to their technology partners and fintechs as a competitive differentiator at this point? 

Pettet: We facilitate it by designing our digital banking platform to be API-based. We have a library of over 1,700 APIs.  We are developing a set of aggregated services to support key customers use cases such as mobile, while also developing an API gateway to provide banks greater flexibility.  In parallel, we are building tighter integration across Bottomline platforms and a well-curated set of fintech partnerships that are deeply integrated at the UI-level such as Autobooks and Jack Henry iPay in addition to our much larger set of direct and SSO-level integrations to other core providers and ERPs.  All this together creates new value propositions for customers and drives innovation. 

Q: Kevin, the report singles out Bottomline for “creating a deeper payments ecosystem.” What does that mean to you and what was your reaction to that specific positive factor? 

Pettet: It means that we have a unique combination of assets that creates compelling new value propositions for banks to better serve their customers, and that goes from small- and medium-sized businesses to commercial and large corporates with multi-bank relationships. It also means improved monetization of low value payments and increased cash visibility. Those are the things that can position banks to win the battle for primary relationship ownership and accelerate growth.

Q: And do the integrations of Paymode-X and the TreasuryXpress cash management solution into digital banking feed into that concept? 

Pettet: It was rewarding to see that this value proposition really resonated and yes Paymode-X and TreasuryXpress do feed into that concept.  We are building integration between Digital Banking and Paymode-X to enable banks to create new revenue streams by better monetizing ACH payments. We do that by clearing a portion of those payments via our business-to-business payments network where banks can benefit from a revenue share similar to card interchange fee models. We’re also integrating our multibank reporting functionality in TreasuryXpress to give commercial and corporate customers with multi-bank relationships better visibility into their holistic cash positions across all their banking relationships. 

Q: Finally, how do you build on the accolades in this report? What are the key factors in achieving future success? 

Pettet: We focus heavily on staying ahead of the market. You know, five or seven years ago, we were the first to identify the emerging trend where B2B expectations were becoming more consumer-like. It led us to be among the first financial technology companies to invest heavily in UI/UX.  In addition, we are leading with our Engagement Optimizer analytics offering that allows banks to better identify trends and transaction patterns across their customer base and benchmark them against a cohort of peer banks to understand performance.  But overall, we stay focused on positioning our customer, the bank, to win the battle for primary ownership of the customer relationship. Our focus has been and continues to be helping banks to win.

Cheney: I’d like to reinforce one thing that Kevin said here. There are a lot of things coming together right now that make primary ownership of the customer relationship very important. It’s a very interesting intersection and although they are required to have multiple banking relationships, the corporate customer is going to go first to their primary bank for the majority of their cash management needs. That's what's going to drive the growth. That's been core to what we've done for a long time: creating new payment monetization opportunities.