• Russell Bennett, Chief Technology Officer at Fraedom


• 15.06.2018 10:30 am
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While retail banking may be quick to take a customer-first, technology-led approach to innovation, commercial banking has been sluggish to embrace new technologies and customer expectation.  No one is waiting for commercial banking to play catch up. Fintech “challengers” have passed the one million customer mark and over a third of US SME businesses now borrow from non-traditional lenders. With retail banks upping their game, it won’t be long before we see the consumerisation of commercial banking. Those who fail to adapt, risk being left behind. 

This is a challenge for commercial banking. Clients will expect commercial banks to offer the same seamlessness, digital access and immediacy they enjoy from their personal banking services. But commercial banks lack agility thanks to the siloed nature of their departments and the lack of interoperability between technologies and data across business divisions.

By embracing the latest technologies and leveraging them to drive competitive advantage, commercial banks do stand a chance of survival.  We outline some of the top technologies that commercial banks can’t afford to ignore.

1. Biometrics and security

When adopting new payment methods, banks must strike a balance between ease-of-use, ease-of-access, and maintaining stringent security. With consumer payment methods using biometric authentication, such as fingerprints and facial recognition, it won’t be long before corporate clients expect to see the same.

Extending biometric functionality into the corporate card arena has the potential to make the commercial payments process more seamless and secure. While challenges remain, mobile wallets that defer to the individual’s personal attributes to make secure payments on these cards, whether authenticated by phone or by “selfie”, offer one potential route forward. But there are still many challenges ahead before the above becomes a commercial reality.

2. Artificial intelligence (AI)

Automation – replacing humans with machines for repetitive processes – is dramatically increasing the number of financial transactions in an organisation. However, while it can track and store many more processes than humans can – and more accurately – it can’t provide the next level service many clients are coming to expect of their financial partners: planning and modelling.¹

AI is rapidly establishing itself as the missing piece of the puzzle that takes the various data flows created by automated transactions and knits them together to discover patterns. All this is very important to commercial banks because patterns in spending and efficiency can potentially deliver valuable insights clients can use to improve their financial health.

3. APIs

Providing better customer experiences can easily fuel new business wins and reduce churn rates. Meeting rapidly changing customers’ demands, and expectations means there is growing pressure to provide new, easy-to-use, digital services – fast.

Application programming interfaces (APIs) facilitate the rapid innovation in products and services. Creating new applications using APIs is one of the best ways to keep up with innovation challenges.

To keep pace, banks need to either invest heavily to develop these apps themselves or partner with fintechs in a bid to be more effective and efficient.² By working together and taking advantage of APIs, banks and fintech firms can leverage their complementary strengths, enhancing the customer experience much more than either entity could do on its own.

4. e-Payables

The use of different payment types (whether it is plastic, virtual or via mobile wallet) is partly a response to the consumerisation of our financial experience. Corporate clients can’t understand why payments should still be a laborious process of raising invoices and purchase orders, requesting printed cheques or bank transfers and creating lengthy payment terms.

Instead, the immediacy of a card – real, virtual or embedded in an app – ties all the above elements together. It gives unsurpassed traceability and is easy to add to financial management software.

Using payment cards as a substitute for invoice terms makes them a useful tool, not only to enhance a company’s working capital positions, but also to improve traceability, security and the level of control that can be placed on business spend.

5. Expense Management Systems (EMS)

Expense Management Systems are one of many tools that can be brought together into a single financial view, helping businesses gain greater control and visibility over expenditure. Unlike written expense policies and separate transactional management software, an EMS embeds expense policies into the technology, allowing real-time reconciliation and approvals to take place. Employees adhere effortlessly to company policy while requesting the need for spend, submitting card or cash claims, all at the touch of a button or directly on their phone.