As we head into 2022, small business owners are expecting – not merely appreciating – a smooth business banking experience. To deliver this experience, financial institutions need to digitize their processes. Through digitization, you can not only provide a smoother customer experience but also gather valuable data that can drive better performance for your financial institution.
Here are 5 business banking platform features that can help your bank thrive in 2022:
1. Smooth Customer Experience
The COVID-19 crisis forever altered expectations for banking services. In the past, small business owners were willing to make visits to branches to do everything from open a business checking account to apply for business credit cards to inquiring about lines of credit. A “time to decision” of 3-5 weeks for a small business loan was the norm.
But those days are over, as it’s now possible – and increasingly common – for banks to make small business lending decisions in as little as 24 hours with the help of a business banking platform.
It’s not just about speed, however, but also about creating a smooth user experience. A user-friendly application only asks small business owners for the information that is necessary for the financial product that is being applied for. If a user is applying for a business savings account, for example, it would be unwise to ask them a laundry list of questions about the financial health of their business.
You also want a business banking platform that can offer all kinds of lending products. Even if a platform can accommodate all of the products you currently offer, that may not be enough. What if the SBA creates another new loan program? Or if you create new banking solutions? Either way, you want to be able to move quickly.
Finally, you have to consider the costs of maintaining a smooth user experience. Are you going to have to keep expensive IT staff on hand to constantly tinker with your mobile app? If so, that would cut into the profitability of your banking services. Look for a business banking solution that requires minimal maintenance from your team.
2. Customize to Your Brand
With mobile banking becoming more prevalent, you lose some of the relationship-building opportunities that were previously available to your bank. If you streamline the customer experience and meet the business needs of your customers, you can develop a strong reputation that engenders strong customer loyalty.
But you can take it a step further, and get a business banking platform that provides a fully customizable user journey design, including your brand logos, style, and custom layouts. By building brand recognition, you protect your financial institution from the commoditization that can happen if small business owners can get their banking needs met by other financial institutions.
There are other ways that you can differentiate your online banking experience, such as offering a bevy of competitive financial products and a lightning-fast user experience, but branding is one of the most simple and straightforward ways to build a sustainable competitive advantage.
3. Automated Credit Decisioning Rules
For many banks, reviewing loan applications is one of their most time-consuming processes. They have to comb through mountains of paperwork, looking at business finances, cash flow statements, disclosures, and much more. The automation of this process, therefore, has the potential to save loads of time.
A business banking platform lets you automate the credit decisioning process, with rules that can be configured to your bank’s underwriting policies – and changed whenever necessary. The rules are based on rule management systems, machine learning, and artificial intelligence, giving you a system that can make excellent decisions from Day 1 – and even better decisions over time.
Does this mean that your business banking platform could make credit decisions on its own? That’s up to you, but in many cases, it won’t. The automated credit decisioning will take routine decisions off your loan officers’ plates, though, and allow them to focus exclusively on higher-value tasks that can’t be automated.
4. Automated Know-Your-Customer Processes
While the Know Your Customer (KYC) standard has helped protect bankers and small business owners alike, its implementation – if done manually – can be a burden on both financial institutions and small business owners. With manual KYC processes, banks have to reach out to customers whenever they need information – sometimes engaging in long back-and-forths to meet requirements.
There are additional challenges after banks collect the KYC data, as they then have to analyze and integrate the data to guarantee that compliance standards are met.
With automated KYC processes, banks enable small business owners to easily verify their identities, allowing them to quickly move on to banking services such as FDIC insured accounts, money market funds, retirement planning, or whatever else. On the bank’s side, a business banking platform can easily collect, analyze, and integrate the data.
5. Real-Time Reporting on Loan Portfolio Performance
Since the onset of the pandemic, the focus has been on loan origination for small business owners, as the Paycheck Protection Program (PPP) led to millions of loan applications. With that in mind, it’s been easy for bankers to deprioritize loan portfolio monitoring, but real-time reporting on loan portfolio performance should be a top priority.
Here are a couple of benefits you get with a loan portfolio monitoring feature:
1. Identify risky loansIf, after issuing loans, you aren’t monitoring them in real-time, you aren’t going to discover loans that “turn bad” before it’s too late. For example, if a small business owner is struggling with cash management, you would want to know about that before they miss a loan payment, because by then, it may be too late to rectify the situation. While it’s possible to simply ask customers to routinely submit financial data, it’s impossible to review that data as often as software. By using a business banking platform, you could get an alert the moment a ratio moves to a dangerous level.
2. Learn what’s happening across your portfolioWith loan portfolio monitoring, you can learn about the trends that are driving your loan portfolio’s performance. For example, you have small business owners who are defaulting at a really low rate in one location… and a really high rate in another location. With that data in hand, you can take action, maybe offering more financing options to the high-performing small business owners, and restricting your offerings to the ones that have been struggling. With loan portfolio monitoring, you can quickly get this data… instead of being forced to spend countless hours putting it together.
The Bottom Line
The commercial banking landscape promises to get more competitive in 2022, as banks have had more than a year and-a half to adjust to the digital transformation initiated by the COVID-19 pandemic. With a business banking platform, such as Biz2X, you can position your financial institution for prosperity.