“First and foremost, you must know your customers and their needs.” That’s the central tenet of my approach to digital banking here at Bottomline. As the general manager for enterprise banking, I lead a business segment that sees trillions of dollars per year flow through its Digital Banking platform.
Given the current environment, I expect banks to reassess technology investments and partner relationships. As they do, they will recognize that digital banking platforms can be the fundamental core of how commercial banks can get, keep and grow their customer base. I recently discussed these issues with our editorial team here at Bottomline and the result was this Q&A about the current state of the banking industry and its customer-centric future. I hope you find it useful, and I look forward to your comments.
Q: Kevin, we’re looking at a business sector that has recently seen its share of liquidity issues. The latest Federal Reserve Report on commercial deposits shows that banking is stable in terms of deposits, and in its estimation, there is no cause for alarm. But there is a sense that banks are reconsidering their partnerships and other relationships. Do you agree with that sentiment?
Pettet: I'd say, fundamentally, corporate customers are evaluating their banking relationships, identifying the stronger banks, and ensuring they have relationships with banks that will survive the current market conditions. Or they will, at the very least, ensure their risk is spread by having multiple banking partners. The way I see it, most of our digital banking customers tend to be the stronger banks in the first place because they've taken the time and effort to invest in their platforms. However, if they see weakness in their vendor offering, they will be looking to migrate to a new offering to position themselves better to serve their customers and benefit from what I call a flight to stability.
Q: If a bank wants to expand digital banking platforms or strike new partnerships, what should it look for in this environment?
Pettet: They should validate the vendor’s overall financial strength and backing first and foremost. Secondly, they should look at the vendor’s experience in migrating customers onto their platform. I would ask questions such as, has the vendor migrated customers off the bank's current platform and onto theirs? What value-add services and offerings does the vendor provide either themselves or through partners to ensure support and adoption? Migration to a new platform can be a point in time that causes attrition in your customer base. I would want to know how your vendor helps mitigate that significant risk.
Q: How does Bottomline stack up against the competition from your perspective?
Pettet: Our platform provides quite a few things that are designed to scale to meet the demands of banks of all sizes. We serve banks with billions to trillions in assets, and we service the needs of their customers, from small businesses all the way up to enterprises with multiple bank relationships. The platform can be the portal, it can be deployed as a white-labelled solution under the bank’s portal or be deep-linked into from the portal. And finally, the platform is API-based to enable collaboration with fintechs that allow the bank to create new and unique customer experiences. With us, banks get the market leading platform that is capable of scaling to serve the needs of businesses of all sizes. At the same time, it gives banks flexibility in how the platform is deployed, technical ability to innovate with fintechs, and regular upgrades enabling them to constantly bring new features and offerings to market for their customers.
Q: You mentioned customer attrition earlier. How would you counsel a commercial bank to keep customers in this environment?
Pettet: First and foremost, you need to know your customers and their needs. Take the time to invest in benchmarking and analytics tools that provide you visibility into how your customers are using and adopting your platforms. Have visibility into how you perform across key business metrics compared to your peers. If you know this, you know your customers. You know how you're performing. You understand how they're adopting the platform. It's exactly what we do all day to ensure the robustness of our applications. And this is the same type of behavior that banks exhibit if they truly understand the needs of their customers.
Q: It sounds like we’re trending into the area of platform agility.
Pettet: We are. I'd say frictionless digital experiences are the expectation now, and they ultimately are tied to banks delivering intuitive and seamless experiences across their platforms to their customers. To do this, the commercial banking platforms need to be API-based. They need to be easily extendable, and they need to be positioned to enable fintech collaboration. I think the best defense for banks who worry about pressure from fintechs is to collaborate with them. Ultimately, commercial customers not only want somebody they trust, but they’re also looking for digital features and capabilities that the bank needs to provide. If the bank doesn't offer it, they will look to fintechs to do so.
Q: Do the current dynamics in banking – where liquidity is an issue - influence retention strategies?
Pettet: It's all about cash forecasting and visibility. We're investing heavily in this area. We're trying to drive tighter integration with ERPs and treasury management solutions. Because when you look into your commercial and corporate customers, most will have multiple banking relationships. It's often very hard today for commercial or corporate customers to see a holistic view of their cash position across multiple banking relationships. We want to give our commercial customers a holistic view of their cash management, and that in turn positions the bank to win the battle for primary banking relationships.
Q: If we’re talking about customer strategy, the mantra is “get, keep and grow”, correct? How do we grow the value of our customers, and in turn, how do you think commercial banks can grow the value of theirs?
Pettet: You grow value by covering the basics. You must provide the fundamental level of feature, function, and capability across the key payments and reporting models that are necessary to run a business. I’m talking about your ACH, checks, wires, balance and transaction reporting – this sets the foundation. Then you need to provide new capabilities and offerings. Mobile is an expectation today. Real-time payments are an expectation today. APIs are becoming an expectation. So, we have a constant vigilance about being ahead of the market. Wayne Gretzky used to say you don't skate to where the puck is; you skate to where the puck will be. That’s the position in which we function and constantly aspire to.
Q: So, you mentioned forecasting, which, from everything we’ve read in our own research and other sources, is a tough shot these days for treasurers and other finance leaders. If you had a roomful of bankers, how would you counsel them about improving cash forecasting?
Pettet: That’s another key area of investment for us. In my view forecasting for business customers is tied to tighter integration between online banking and treasury management systems. It’s critical to provide a business with complete visibility to its cash positions across multiple banking relationships. Ultimately, when you look at a commercial or corporate customer, they don't bank with just one bank. Typically, they have three, four or even several banks. They may even have an international arm and bank accounts abroad. So how do you combine that into one holistic view for the corporate treasurer, the comptroller and the CFO to see and understand how they're performing across each relationship? That ability comes through the treasury management system being tightly integrated with the online banking solution. That is really where the future is headed for larger corporates.
Q: Let’s talk partnerships. There’s data, technology and transactions – the fundamentals of a financial partnership. But what about the intangibles? What makes a good partner in the current landscape?
Pettet: You must focus on customer delight. We constantly invest in innovating our product, and in our delivery and support capabilities. Anyone can make a lot of commitments. We maintain a 100% success rate in delivering complex mission-critical platforms to banks. Ultimately, we invest heavily in it and see our ability to deliver it as a core competency. That’s what sets us apart, and it sets the foundation for long-term trusted relationships with our banks.