Commercial banks can’t settle for the status quo. To stay relevant and meet the evolving needs and expectations of business clients, it’s crucial for banks to offer differentiated products and services. This type of enhancement is only possible through progressive modernization of existing technology stacks.
With 36% of small and medium enterprises (SMEs) likely to consider switching their main financial provider in the future, and 75% of businesses open to opting for alternative digital-first financial offerings, traditional financial institutions (FIs) are staring down the competition in big tech and fintechs. It is more important than ever for banks to align with these changing dynamics to deliver creative, digitally enabled solutions that support their business clients and protect against customer attrition.
To better serve business customers, banks and other traditional FIs are embarking on progressive modernization journeys, which allows institutions to decouple transactional products and services from a legacy core without significant disruption or cost. Progressive modernization enables FIs to deliver four critical benefits to business customers:
1. Deliver the latest in transactional banking products
Offer next-generation products and services that businesses have come to expect, customized just for them. By pursuing a progressive modernization strategy, you can introduce new products such as multi-currency virtual accounts, digital wallets, and business installment loans on a sidecar platform, without having to make significant changes to your core banking platforms.
This approach also supports iterative improvements to existing products without having to completely rebuild, allowing you to take better solutions to market, quicker.
2. Launch virtual account structures for your corporate clients
Protect your corporate clients with virtual account capabilities. Watch fee income loss to alternative providers dwindle to nothing while also reducing operational costs related expensive notional pooling solutions. Virtual accounts have become a standard requirement for corporate and institutional clients.
Organizations are searching for ways to simplify management of complex account structures, automate reconciliation of payments, improve security and fraud prevention, and optimally manage working capital across a group of accounts. By building these account structures on adjacent platforms, you can provide a treasury management solution that wows your largest customers.
3. Offer corporate cards and associated loyalty programs
Corporate cards offer several advantages to businesses, allowing them to better manage operational expenses and provide improved user experience for their employees. Historically these have been the domain of larger banks and credit card issuers, but several new entrants to the market have indicated an appetite for better solutions. In addition, there is growing demand for linked loyalty programs that provide benefit to the business, their employees, and the issuing bank.
By upgrading your cards platform, you can make launching a new corporate credit program easier than ever for your business customers. With capabilities like virtual card provisioning and loading to digital wallets, you’ll empower customers with convenience.
4. Enable embedded finance solutions
Businesses increasingly expect a seamless transaction experience across all channels. Financial institutions that still rely on legacy technology risk losing their customers to those who are integrating modern systems into their tech stacks, allowing them to embed their services in third-party platforms. By adopting a similar approach with progressive modernization, you can reach new distribution and acquisition channels, and deliver transactional products that your customers love, in the platform of their choice.
Ultimately, modernization isn't just about staying ahead of the competition; it's about empowering SMEs to thrive in an increasingly digital world. By embracing change and adapting to evolving preferences, banks can position themselves as trusted partners in their clients' success stories.
Modernize your payments tech with E6
Episode Six (E6) is a global provider of enterprise-grade payment processing and digital ledger infrastructure for banks and companies looking to offer payments to their customers. E6 delivers the innovative capabilities needed to compete with disruptors by augmenting existing infrastructures.
Flexibility, adaptability and resilience are built into the core of E6’s TRITIUM® platform ensuring clients maintain a market-leading position. E6 operates globally across 40 countries with an expanding team located in the U.S., Europe, Japan, Singapore, Hong Kong, and Australia. Investors include HSBC, Mastercard, SBI Investment Co., Ltd., Anthos Capital and Avenir.