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Opinion > Fraedom

Why commercial banks are in danger of being left behind

Russell Bennett, chief technology officer at Fraedom | 16:57 Wednesday 19th September 2018

Harnessing a customer-first, technology-led approach, retail banks are paving the way with innovation.

Their commercial counterparts, however, are a little slower on the uptake. Interestingly, no one is waiting for commercial banking to play catch-up and this is largely thanks to the developments in fintech. Of course, there is the palpable risk of being left behind for those reluctant to change.

Clients of commercial banks will expect the same seamlessness, digital access and immediacy that their personal banking platform affords them and this has created a real challenge in the commercial sector.

By embracing the latest technologies and leveraging them to drive competitive advantage, commercial banks do stand a chance of survival. Here are 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. Additionally, extending biometric functionality into the corporate card arena has the potential to make the commercial payments process more seamless and secure.

2. Artificial intelligence (AI)

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. Application programming interfaces (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.

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.

4. ePayables

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, preferring instead the immediacy of a card – real, virtual or embedded in an app.

5. Expense Management Systems (EMS)

EMS are one of many tools that can be unified into a single financial view, helping businesses gain greater control and visibility over expenditure. Employees adhere effortlessly to company policy, while requesting the need for spend, submitting card or cash claims, all at the touch of a button.

There is increasing evidence to suggest that commercial banking customers want their at work banking experience to be as smooth as their personal banking experiences. Commercial banks would achieve a much greater agility to help reach their customer expectations by simply embracing these new technologies, subsequently avoiding being left behind.

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