Digital Cash Management Solutions: Banking Technology

The bar has raised significantly for customer user experience expectations. Corporate treasurers no longer compare their user experience with one bank to that of other banks, but rather to their best digital experience in general. As a result, they increasingly expect banks to understand their customer journeys, to know who they are, and to be able to provide recommendations through analytics as online retailers do. Additionally, across all their transaction executions and interactions with the bank, they expect the same ease of use, simplicity of navigation, and modern presentation offered by other industries. They see great value in dashboards and wizards and seek a tablet-like look and feel with self-service capabilities.

As the pace of change in payments technology continues to increase, corporate user needs are evolving with those changes. Bank clients are faced with an increasingly complex landscape of receivables and payables, requiring automation for quick action and decision-making. Outdated cash management platforms do not always provide the capabilities for cash flow forecasting, integrated reporting, and efficient accounts receivable and accounts payable processing and automation. Banks that cannot solve for these challenges are finding themselves at a competitive disadvantage and are losing market share to other banks and sometimes even fintech providers that have found strategic offerings to disintermediate banks.

While most banks continue to segment their client base by revenue size, many find that the lines distinguishing needs across segments are beginning to blur. Most business customers, regardless of size, are growing in sophistication and demonstrating a growing comfort level with technology. This is resulting in a greater willingness to leverage it to manage their financial transactions and automate once-manual processes. It is also leading to faster adoption of newly rolled-out capabilities. A comparison of past Aite Group research found that in August 2011, approximately 15% of businesses reported being first adopters of new technology made available at their bank, compared to 41% in July 2017.

As competition becomes more intense, banks are looking to deepen relationships and position themselves as the customer’s primary bank. Establishing the bank as the primary bank provides more stable and predictable noninterest income. Cross-selling cash management also makes it harder for a business to leave the bank, referred to as “anchoring” clients. Currently, 38% of banks report tracking the percentage of clients for whom they are the primary bank (Figure 4). The majority of the 62% of banks that are not tracking this state that they desire to do so. Of the banks that are tracking the metric, regional banks are most likely to believe they are the primary bank for their clients, reporting that on average they are the primary bank for 65% of their cash management customers.

Finally, banks need to identify ways to stand out in an industry in which many of products and services are increasingly viewed as commodities. Bank customers report few major functionality gaps in the offerings provided by their banks. All financial institutions in the U.S. allow clients to make and receive payments and have some sort of reporting of account activity. What bank clients desire is for the experience to meet their consumer expectations in the corporate world, with tighter integration across products that are easy to use with bells and whistles that create a superior experience. Planned enhancements are what banks hope will make them stand out to retain existing clients and gain more market share with features that go beyond the basic product capabilities. Forty percent of large and midsize banks view technology as a way to differentiate themselves, and their cash management platform is the most obvious customer-facing investment.