Five Steps Toward Effective Commercial Banking Partnerships

Banking And Financial Messaging


Rita Hubner

Sep 12, 2023

When the topic is digital banking, buzzwords and jargon abound. Digital transformation, payments modernization, banking-as-a-service – take your pick. To cut through this clutter it’s helpful to remember that the end goal for digital banking on the commercial side of the house is effective payments and cash management. And to that end, banks need a digital solution that engages customers and translates their data into creating a competitive advantage for the bank. The simple fact is that commercial customers expect fast, personalized digital experiences from the banks they do business with. 

“The common bank practice of segmentation by business size is no longer enough,” says a recent Aite Datos report that cited Bottomline as “best in class” for payments and cash management. “Personalization must be granular, dynamic and based on analytics. Banks and technology platforms are responding with new customer journeys based on role and frequently used transactions.” 

But before that outcome can be realized, banks need to evaluate their current resources, existing technology and partnerships. The groundwork needs careful consideration before enjoying a real competitive improvement in payments and cash management. To get the process started, we recommend the following five steps:

Establish a task force: Many financial institutions we work with report that identifying and establishing a cross-functional task force is a critical first step toward successful payments and cash management in general and selecting a commercial digital banking platform in particular. Decisions will require buy-in from several departments, including IT, operations, product, digital, risk, and compliance. The initial objective for your task force is to get a solid understanding of your current commercial banking operations and identify the areas for improvement. This analysis includes the customer-facing aspects of your financial institution (such as customer service and the user interface) as well as the internal aspects behind the scenes (data and analytics). The task force should consider not only your immediate needs, but also how to build out your financial ecosystem in the future. 

Conduct a situational analysis: The task force should place a situational analysis at the top of its agenda. By asking the right questions, it will define current challenges, as well as clues to adding new solutions or ditching outdated ones. At the very least, a good situational analysis will cover four areas: 1) Gaps in current technology and processes that inhibit competition, such as real-time payment capabilities, seamless onboarding for new customers and up-to-date fraud detection and defense. 2) The ability of your current infrastructure to integrate innovations. If the current payments and cash management solution you’re making available to your commercial customers relies on intensive manual processes rather than full automation, you’re most likely in need of a substantial upgrade to your current payments infrastructure. 3) Fraud detection and defense, which should include multi-factor authentication and application-level user behavior monitoring and analytics to detect and alert against insider threats. 4) Data and analytics, which should accurately find the patterns in customer behavior that will allow predictive analytics and greater insight into customer activities.  

Set goals: After the task force has completed the situational analysis, it’s time to set the goals for your forward-looking digital banking infrastructure. Those goals should reflect the evaluation undertaken and cover the four areas we identified earlier, as well as scalability, usability and efficiency. These goals should have desired outcomes attached to them. For example, one of your goals should be to provide your customers with a seamless and personalized experience. The result of that goal should be increased customer satisfaction and loyalty, leading to higher customer acquisition and retention rates. 

As the Aite report stated, the market is trending toward the goal of digitalization of the entire bank rather than just a few platforms. Achieving this transformation will involve the APIs that provide the innovative interface with fintechs and other partners. “The emphasis on APIs to expand digital platforms is growing,” according to the report. “APIs are being asked to support more initiatives from the bank’s desire to build unique UIs and more real-time integration for data access and payment initiation.” 

Define technology requirements: Your goals should be reflected in a new set of technology requirements. For example, one requirement heading could be product management, capability and strategy, including development, performance and testing methodology. Another could be under the heading of information reporting, including cash positioning and customized data analytics. Another might come under the heading of security, acknowledging the need to invest in advanced fraud prevention technologies such as multi-factor authentication, encryption, firewalls, intrusion detection systems, and anti-malware tools to ensure the security of transactions and customer data. 

Select the right partner: After you’ve settled on the technology requirements, your bank is ready for the final step, which is choosing a digital banking partner. According to Aite, the most important factors in this choice are a modern user experience, integration into ERP systems, embedded analytics and real-time payment capabilities. But that just scratches the surface of the evaluation criteria. We recommend adding the following items to Aite’s list: 

·       Reputation: Analyze each vendor’s experience, longevity, references, and financial stability. The partner should have a successful track record of implementing projects of similar breadth and scope. Ask about the number of implementations they have completed, as well as what noteworthy clients are in their portfolio. 

·       Guarantee delivery: A vendor with many implementations under its belt will have a better understanding of the challenges you face and can draw upon a wealth of best practices. This significantly reduces your implementation risk. You should feel 100% confident that you will have a fully integrated, working solution at the end of the process.

·       Benchmark performance: Find a partner who can aggregate data points from a variety of financial institutions to enable you to benchmark your performance against your peers. These actionable insights will offer a competitive advantage and help you win more primary customer relationships. 

The Bottom Line: A great strategic partner will have the technology and features you need to compete today and the vision to ensure that you remain a competitive bank three, five, or ten years from now. Ask questions to determine if a vendor truly understands the digital, competitive, and regulatory landscape. They should also have a well-grounded perspective as to what financial institutions need to compete now and in the future. 


Related topics

Digital Banking

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Rita Hubner

Rita Hubner is VP Solutions Consulting for Strategic Accounts for Bottomline with a primary focus is on client user experience and digital and payment transformation for banking.

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