The Battle of Traditional Banks for Business Banking Accounts
For many organisations, the right banking partner is vital in a business meeting their strategic goals.
This is why banks are lining up to convince business owners they are the right bank for them – however, according to Steve Morgan, Senior Director of Financial Services at Pega, there are several key factors to consider when choosing a bank for your business accounts.
In a recent Pega survey of 340 UK businesses who use credit and lending services, traditional banks continue to lead the way in terms of who organisations would choose if they were to switch providers. This is despite the rise of challenger banks like Tide, who have just recently announced that they have signed up 100,000 customers for its app-based business accounts.
However, there are businesses who are keen to switch, and the emergence of technology is making it easier. Two thirds of large organisations considered changing providers and nearly a quarter (22%) have changed their main bank in the last year. Over half of medium sized organisations are similarly placed for switching. The main reason why businesses find themselves changing providers is because of high charges, plus a requirement for better online banking facilities and improved service.
When asked about what technology innovations they would like to see from a bank, businesses said they would like to see greater use of AI for more personalised, tailored and timely offers. According to a report by Business Insider Intelligence, AI is being used by banks to improve customer identification and authentication, as well as providing personalised recommendations and insights, but there is clearly a way to go.
Another concern that British businesses voiced when it came to choosing a bank was the idea of transparency; the extent to which a corporation’s actions are visible to the customer. During the onboarding processes businesses said they would prioritise transparency, consistency and automation when choosing a new banking partner. They also want to see improved speed of service, confirmation texts/e-mails, and a greater understanding of customer needs to deliver the right products and services.
The traditional larger banks might feel comfortable when hearing that they are still leading the way in terms of customer preference, but that would be a mistake. The Pegasystems study suggests business customers like the idea of improved use of technology and AI in their banking service. This is going to be a critical competitive comparison point for the future of business banking. Switching looks to be increasing in business banking and both the technology and options for clients are improving.
Clients expect AI to be used to help identify needs better, so that more personalised products and services can be offered, and so banks can predict the client needs when they switch or take out a new product. This is the time to make a great impression.
The banking provider that a business chooses will depend on the organisational structure of the business itself. An organisation is likely to form a partnership with a bank if that bank can demonstrate their exceptional capabilities and understanding of the business’ strategic goals. Customers tend to be loyal if they believe that their needs are being met by their financial services provider. Therefore, it is important for banks to make sure that their customers are satisfied by their services. This ultimately comes down to the banking provider being well informed about the business, as well as providing outstanding service through their channels.