By Russell Bennett, Chief Technology Officer at Fraedom.

Commercial banks are facing an ever changing, more consumer-focused banking landscape. This is because commercial customers are digital banking native – 85% of all commercial banking customers use digital banking services in their personal lives. It is, therefore, natural that these customers are starting to demand similar, if not the same, experiences from their business financial services.

Customers have come to expect seamless, digital access and immediacy when dealing with financial institutions – whether it’s for personal or business purposes. This has left some banks seeming like they are on the back foot as they are weighed down by siloed departments and the lack of interoperability of legacy technologies and software across the business.

To survive, commercial banks must find a way to adapt to this new world of finance and compete with the nimbleness of the challenger banks. So, if digitalisation is the key to survival, where do we begin?  

• Biometrics and Security – When adopting new payment methodologies, banks must strike a balance between ease-of-use, ease-of-access, and the need to maintain stringent security. We’re already seeing consumer payment methods using biometric authentication, like facial and fingerprint recognition, entering the mainstream, so it is unlikely to be long before corporate clients are expecting to see the same. 

Extending this functionality into the corporate card arena can make commercial payments more seamless and secure. While challenges remain before this becomes a reality, 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 an opportunity for banks.

• Artificial intelligence (AI) – Commercial clients want more than just transactional facilities. Automation has dramatically increased the number of financial transactions in an organisation and, while it can track and store more processes than humans can – and more accurately – it can’t provide the service levels many clients expect of their financial partners: planning and modelling.¹

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

• APIs – Customers’ demands, and expectations are moving as rapidly as the leading-edge technology they are exposed to. As a result, there is growing pressure on the banking industry to provide new, easy-to-use, frictionless digital services fast.

Application Programming Interfaces (APIs) are a key enabler for banks, facilitating use of third party technology to deliver value-adding services of their own. Creating new applications using APIs as building blocks is now seen as the best way to keep up with the innovation challenges facing the financial industry.

To keep pace, banks must either invest heavily to develop this technology 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.

• ePayables– Corporate clients can’t understand why payments are still 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.

• Expense Management Systems (EMS) – Expense Management Systems are just 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. 

The march of the consumers in commercial banking market is inevitable. The demand for the same benefits consumers get from digital-first retail banking experiences is there and will grow – no commercial bank can afford to be left behind. Investment in new technologies gives long and short term benefits – improved adaptability to changing markets, improved customer experience and greater brand loyalty.