Time to reimagine business banking: helping optimise business processes

Financial institutions have been focused on the transformation of consumer-driven payments and the move to faster online and mobile payment methods. Now is the time for financial institutions to support their business and small and medium enterprises (SMEs) customers with the same fast, automated and friction free digital experiences

David Chance, Vice President, Strategy and Innovation, Enterprise Payments Solutions Fiserv

Financial institutions have made great strides with their retail banking services, quickly responding to evolving customer demands and changing technology, and moving beyond digital self-services to the delivery of value-added services. When it comes to corporate banking and services for small and medium-sized enterprises (SMEs), a similar evolution is still underway. To optimise services for these customers, now is the time for financial institutions to pivot from a payment product approach to a business-centric approach, working toward an end-to-end customer journey that is frictionless, automated, efficient, and digital. 

While SMEs have been hard hit during the pandemic, they are the group that has been quickest to innovate, streamline their business processes and drive efficiency. They now need their financial institutions to support them, providing a complete, unified service rather than divided, individual products. 

Ask the owner or operator of an SME to list their highest priorities and payments will not be high on the list, however, payments are likely to have a connection to each priority. Within the industry we discuss initiatives such as instant payments, ISO 20022 for extended data, and Open Banking for interaction, yet what we fail to do is recognise that these are not the topics that businesses understand or discuss. For them, it’s selling and buying goods and receiving and making payments. Businesses benefit when financial institutions can clearly articulate the value proposition of these enhancements.  

Opportunity to Improve cash flow management and reconciliation with instant payments and Open Banking

By their name, instant payments invoke a view that the payment is completed within a few seconds, however, the benefits to businesses go beyond payment speed, including the availability of funds at a time that suits the business, and risk-free finality when the transaction is completed. Financial institutions traditionally provide services during a normal business day and businesses have tailored their own processes around this. Instant payments allow businesses to perform their financial activities around their own business cycles, redefining and optimising their processes and flows.  

As payments become more embedded in these business processes and flows, additional capabilities must be taken into account. Financial institutions need to provide services that include the following: intelligent routing, based on the business demands of the payment and the context in which it is being made; resolution and enhancement of payment data, to ensure that it meets the needs of pertinent regulatory bodies; and simple, timely reporting, whether that is at the time of the payment or aggregated and delivered at the start of the business’ operating day. 

ISO 20022 data formats can improve efficiency only if implemented at an industry domain level

The implementation of ISO 20022 has been sold on the use of a standard language, a structured message, and extensive data. However, from a business perspective, businesses are being asked to implement a complex new message format, including significantly more information in a structured way that may appear to benefit the regulatory bodies rather than the businesses themselves.  

Remittance data is branded as the utopia for solving all business’ exception and reconciliation processes, but what we have provided is a generic workbook that can be filled in any way that a business feels is necessary. What we don’t have is a global, industry specific set of guidelines that state what information is to be included in remittance data to ensure that the receiving business gets the information that they need to solve their reconciliation and exception problems.

Open Banking facilitates flexible, convenient, and secure payments 

Open Banking and overlay services – which include the customer experience and the business processes around it – can increase the efficiency of the payments interaction across the business chain. Through these capabilities payment processes can be automated, including making the request for payment, sharing the agreement under which the payment is requested, and ensuring that the payment is received before delivery is signed off or terms have been met. Together they automate processes and remove the need for manual intervention.

Success from understanding the business needs and problems of the SME

Successful fintechs have understood the need to look holistically at a business problem and create a complete solution, rather than a set of independent products. Uber has not been successful just because it embedded the payment element in their app, but because it erased the hard parts of getting a taxi: phoning to book one, wondering if a driver will show up and figuring out how to exchange payment. Uber identified the challenges and solved them from the customer mindset.

Now that we have the tools and the appropriate financial environment available, it's time for financial institutions to focus on challenges they can solve rather than what they can commercialise.  

About David Chance

David Chance is Vice President, Strategy and Innovation, Enterprise Payments Solutions at Fiserv. David sits on several industry bodies including as Chair for Payments Canada’s Stakeholder Advisory Council.  David, with over 35 years in the industry, is a hugely experienced payments professional and recognised thought-leader, with significant global strategy, business, and solutions development background. He is a regular participant in industry working groups. David’s experience includes senior roles at Dovetail as head of product strategy and management, eFunds in corporate cash management, middleware and real-time payments, including supporting financial institutions in strategic planning for UK Faster Payments.

About Fiserv

Fiserv aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; ecommerce; merchant acquiring and processing; and the Clover cloud-based point-of-sale solution. Fiserv is a member of the S&P 50 Index and the FORTUNE 500, and is among the FORTUNE World’s Most Admired Companies. Visit fiserv.com and follow on social media for more information and the latest company news.