5 Digital Imperatives to Maximize Growth and Efficiency in a Recession

The 2023 budget planning season is underway, and financial institution executives face the annual question of where to focus their technology investment to get the most bang for the buck. Many have recognized that winning commercial relationships is critical to long-term growth, but a looming recession means prioritizing efficiency, cost reduction, and client profitability.

The requirements for commercial banking success continue to evolve. Businesses need a modern and seamless digital experience with high levels of personalization, access to real-time data and actionable advice, robust functionality and forward-looking capabilities, and tighter integration and connectivity with third-party systems.

So where should financial institutions focus their budget to meet commercial needs and win in a digitally competitive marketplace? It boils down to five imperatives:

1. Use Data to Optimize Client Relationships
Gone are the days of one-size-fits-all lending. With rising interest rates, relationship-based pricing is more important than ever—not just to grow stronger commercial relationships, but to make sure deals are priced to perform for the financial institution. At the heart of relationship-based pricing is data. Banks and credit unions likely already have the information they need, but accessing it, understanding it, and using it is a labor-intensive, time-consuming obstacle. Digital pricing tools that replace “spreadsheet pricing” are a changemaker for commercial lenders looking to expand portfolios.

2. Deploy Self-Service Tools to Attract and Onboard Small Businesses
According to an Aite-Novarica Group survey of 1,004 U.S. small business financial decision-makers in Q3 2021, almost half of respondents said they consider a good online channel from their financial institution to be either very important or required. Only 9% of respondents didn’t consider it important at all.

Unfortunately for banks and credit unions, non-bank providers are viewed as having a superior digital experience, especially when it comes to speed of decisioning. But there’s a nugget of good news, too. Respondents indicated they’d prefer to do business with their financial institution—rather than go to a non-bank provider—if it could provide the level of capabilities they need. Investing in greater automation and a better user experience will pay off in faster revenue recognition and create stickier relationships with commercial customers.

3. Digitize the Treasury Onboarding Process to Reduce Time-to-Value for Clients
In this modern, digital age, the idea that it can take days or even weeks to onboard a new treasury client is simply unacceptable to most businesses. But this isn’t news to financial institutions. The Aite-Novarica Q2 2022 Survey of Corporate Banking Executive Council Members revealed that 40% of banks admit their treasury onboarding experience falls short of client expectations. Among customers, larger banks score slightly better than smaller ones (32% versus 48% of customers stating longer than expected onboarding times).

Digital automation of the onboarding process—and drastically speeding it up—can result in major ROI for banks and credit unions. Focus on things like smart forms, digital signatures, internal and customer-facing dashboards, integration with CRM, and electronification of product agreements and contracts.

4. Leverage Fintech Partnerships to Expand Commercial Offerings
Providing commercial customers a one-stop shop for running their business helps financial institutions establish primacy and loyalty. Banks and credit unions can expand commercial offerings with services like payroll, accounting, and spend forecasting through fintech partnerships. And many financial institutions already have this strategy in their sights. According to the Q3 2021 Aite-Novarica survey, 50% of large and midsize banks plan to build out their fintech ecosystem this year, and 33% consider it a top priority.

5. Tailor the Digital Channel for Specific Businesses
As mentioned before, businesses want to use their financial institution for more of their needs, but their financial institution must meet them where they are. Especially for small businesses, that means their bank or credit union understands them and serves their sometimes-unique requirements. Aite-Novarica research shows that 61% of businesses believe their primary financial institution understands their needs, which means 39% do not.

Personalized experiences are important: 48% of businesses labeled personalized experiences as either “very important” or “required” to keep their business, according to Aite-Novarica. And ease-of-use also tops the priority list. Aite-Novarica reports that only 39% of businesses describe their bank’s digital offerings as easy to use, and 50% would use more products if usability were improved.

Learn From Your Peers
Some financial institutions are doing these things well and have volunteered to share their insights and successes. Shon Cass from Texas Security Bank, Jo Jagadish from TD Bank, and Dana Gray from BECU will join Dean Jenkins from Q2 and Christine Barry from Aite-Novarica for a webinar panel discussion at 11 a.m. CT Thursday, September 22. Register now and learn more about where you can focus your 2023 budget for growth and efficiency. If you can’t make the live webinar, register anyway and we’ll send you the recording.