Top technologies impacting commercial banking now and in the future Russell Bennett is Chief Technology Officer at Fraedom Over the past five years, technology has proved to be a disruptor and an innovator. It has forced us to challenge convention, transformed customer expectations and is fundamentally changing the way we do business. The financial services world has not been immune. Many retail banks are already successfully catering to customers’ digital needs. And this presents challenges to the commercial banking sector. As time goes by, it is becoming increasingly clear that commercial banking clients are looking for the same seamlessness, digital access and immediacy that they have started to enjoy from their personal bank. The more traditional commercial banking sector, however, is not as easily able to respond quickly to consumer demands. Their agility is hampered by the siloed nature of their data and departments while the technologies and software they currently use often lack the interoperability needed to work across the business. There are challenger banks willing and able to serve customers specific needs today, although much of their data and financial management tends to reside with established banks, mainly for reasons of brand recognition, trust and inertia. Coupled with this, incoming legislation will make it easier for challenger banks and other third parties to provide the centralised financial management services commercial clients are looking for. The commercial banks will remain relevant as far as providing the nuts and bolts of finance requirements. However, the new service providers may end up owning the customer relationship and critically, their loyalty. One way that commercial banking can fight back is by embracing the latest technologies and leveraging them to drive competitive advantage. We are starting to see that today as business banking begins to follow retail’s lead to ensure that it retains an edge. Here we outline some of the top technologies transforming the banking world today that commercial banks can no longer afford to ignore. 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. Fingerprint authentication is now in mainstream use and rapidly giving way to the latest facial recognition functionality. We’ve already seen that consumer payment methods using biometric authentication are becoming increasingly 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 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. The growing role of artificial intelligence (AI) Commercial clients want more than just transactional facilities. Automation – replacing humans with machines to perform repetitive actions – is dramatically increasing the number of financial transactions in an organisation – so much so it becomes hard for humans to track. However, while it can track and store many more processes than humans can – and more accurately – it can’t, currently at least, provide the next level service many clients are coming to expect of their financial partners: planning and modelling. 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. APIs – an approach whose time has come As is the case in many other sectors of the economy, commercial banks are focused on providing better customer experiences, and, by so doing, winning new business and reducing churn rates. Customers’ demands, and expectations, move as rapidly as the leading-edge technology they are exposed to, so there is growing pressure on the banking industry to provide new, easy-to-use, frictionless digital services fast. Application programming interfaces (APIs) provide the technology to exchange customer data with other parties in a simple and secure way, facilitating rapid innovation in products and services. Creating new applications such as voice banking, P2P, loan processing and risk management and using APIs as building blocks, is now seen as the best way to keep up with the innovation challenges facing the financial industry. According to the WRBR, 78.3% of banks are counting on APIs to help them improve the customer experience, with fintech firms agreeing. Fintechs have dominated the API landscape by creating apps that have challenged, and in some cases, surpassed solutions made by the banking industry. According to the World Retail Banking Report 2017, published by Capgemini in conjunction with Efma, fintech firms are more likely than traditional banks to provide consumers with positive banking experiences. Fintechs have dominated the API landscape by creating apps that have challenged, and in some cases, surpassed solutions made by the banking industry. To keep pace, banks now need to either invest heavily to develop this technology themselves or partner with fintechs in a bid to be more effective and efficient. 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 – crossing over from the consumer to the commercial world Similar to the introduction of biometric security in mobile banking, 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. Historically, paying by using a card has been seen as a debt generator. Credit cards, after all, incur interest. However, 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) – getting the benefit of a holistic view An Expense Management Systems (EMS) is just one of many tools that can be brought together into a single financial view, helping businesses gain greater control 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. Technology shaping the commercial banking future Up to now, retail banking has been ahead of the game in embracing new technologies and digital disruption, making commercial banking look sluggish by comparison. This is a situation that is changing fast as corporate banks grasp the need to take advantage of the latest technologies to ensure commercial clients are gaining the same kinds of benefits - from workflow efficiencies through to intuitive, mobile first experiences. There is mounting evidence to suggest that commercial banking customers want their at-work banking experience to be at least as slick as their personal banking has become. Ultimately, they want to be treated like people. It’s that simple. That’s why commercial banks are embracing these technologies and why, by doing so, they are achieving greater agility to help improve their customer experience and gain competitive edge. It’s a trend that is picking up pace and likely to accelerate further in the years to come.
... commercial banks are embracing these technologies and ... are achieving greater agility to help improve their customer experience and gain competitive edge

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