For all of the innovation that’s occurred in the banking landscape, it’s often consumers not corporates that benefit from the latest technologies. While FinTech innovators continue to drive competition with a focus on product functionality and an optimal end user experience, businesses are often forced to use outdated tools, according to Frank Dux, managing director of CoCoNet.

“When you look at retail banking, there have been a couple of newcomers in the market in recent years who come in with shiny, new apps,” he said. “So far, corporate banking users are always left out in the cold.”

The assumption among financial institutions (FIs), he explained, is that the pain of switching banks is not worth the effort, thus business clients will stay with their current financial service providers even if it means reliance on outdated and lackluster products.

But innovations in B2B payments and other corporate workflows like liquidity and cash management among the FinTech community have opened the door for a new era of corporate banking one in which organizations are no longer willing to settle.

Speaking with PYMNTS, Dux explored the biggest drivers for FIs to finally overhaul their corporate banking offerings in collaboration with FinTech partners and why, as B2B payments and banking technology continues to innovate, technological connectivity will be critical to enhancing the end user experience.

The Drive To Upgrade

Thanks to FinTech competition and innovation in the retail banking space, Dux said that more corporate end users are demanding the same types of banking experiences they are now offered in their personal lives.

At the same time, FIs are recognizing that their existing infrastructures are too outdated to offer the agile, optimized services businesses require. Corporates are seeking modern user interfaces (UIs) with a consistent user experience across channels, including mobile platforms.

Even friction within the corporate customer onboarding process can threaten a bank’s ability to adequately service a business, according to Dux.

While FinTechs have often stood as competitors to traditional banks, more third-party solution providers are expanding the Banking-as-a-Service landscape to collaborate with FIs and help them with their modernization efforts. As Dux explained, FinTechs have enabled banks to ease the “build-versus-buy” debate and more easily access tools that can be integrated into the back office.

“”It can be much easier for banks to buy out-of-the-box solutions,” he said. “Yes, there is a certain commercial investment, but it’s easier for the bank because they can make use of the vendor’s deep knowledge and basically move a big part of the workload to the vendor.”

Collaborating with third parties, he added, means the bank doesn’t have to funnel investments in proprietary product development and specialized talent, and then FI can then rely on a vendor to not only develop sophisticated solutions, but also to support a seamless integration and keep those products up-to-date as future innovations emerge.

Connectivity Is Key

As innovation in corporate banking and B2B payments drives ahead, financial institutions fill find themselves even harder-pressed to upgrade their systems and collaborate with FinTech partners to offer businesses the latest and greatest.

Regulatory initiatives like PSD2 and open banking across Europe and the U.K. have heightened requirements among business customers for multi-banking solutions that can present a streamlined, consolidated view across all bank accounts and services a trend that Dux said will require banks to upgrade their systems in order to support those integrations.

Looking ahead, data integrations and APIs will continue to be integral components of the corporate banking world as new innovations emerge. Some of the most prominent include the SWIFT gpi service, request-to-pay capabilities and instant payments, which all require banks to loop into third-party payment networks and service providers. Quickly emerging on the scene are automatic payments initiated by machines, Dux said, a technology on the horizon that will further elevate banks’ need for deep and seamless technological integrations.

Connectivity will also be an essential component of the bank-business relationship, Dux added, with opportunities for FIs to offer user-friendly customer service interfaces with video messaging capabilities, secure document sharing and other functions that close the gap between service provider and client. Further, banks are sitting on troves of valuable customer data, which can be analyzed to identify customer behaviors, predict needs and develop enhanced and personalized experiences.

The future of corporate banking is bright, but for many FIs, it’s also complex. That’s because as connectivity is embraced, banks are no longer only concerned with what occurs within their own four walls.

“The underlying technological architecture is becoming more interwoven and connected,” Dux said of banking systems. “On the other hand, users demand simpler and better experiences. For banks, things are becoming more complex because this isn’t only inside their own realm anymore now that they are connected to different service providers.”

Financial institutions will need to be strategic about the partners they collaborate with and the processes they use to maintain those connections. But what is certain is that traditional banks can no longer afford to ignore the more sophisticated needs of their corporate clients. Luckily, the technology exists today for banks to prepare for tomorrow.

“Looking into the future, everything is about connection, which is available thanks to APIs,” said Dux. “They’re out there; they just have to be used.”

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NEW PYMNTS DATA: THE DECEMBER 2020 SUBSCRIPTION BUNDLING REPORT 

About: The PYMNTS Subscription Bundling Report, surveyed a census-balanced panel of 2,962 U.S. consumers to gauge how their attitudes toward bundled subscription services have changed during the pandemic, especially those offered by companies in the streaming sector. The report also examines how the knowledge that a COVID-19 vaccine will soon be available throughout the U.S. could affect their perceptions.