By Craig Dunham, VP of financial services at Seismic
What does the future of digital mobility in commercial banking look like? Before one can answer that question, it’s important to look at its current status and that of the commercial banking space on the whole. As an attendee and panelist at this year’s CEB Commercial Banking Showcase in Washington D.C., I was privy to market insights that illustrate what banks are experiencing, where their key pain points reside, and how the industry is prioritizing its future initiatives.
At the CEB Showcase, it was unequivocally apparent that the aggregation and utilization of customer data across integrated systems is imperative to strengthening the industry. However, in order for banks to capitalize on such intelligence, it must first be harnessed via the most appropriate and relevant engagement channel. And in today’s world, that channel is mobile.
Industry executives predict that for small business, business banking and middle market, baseline revenue growth in 2016 will be just 1.1 percent, with small business and business banks yielding an actual 11.4 percent increase in wallet share attributable to RM- and product-driven insights, or a potential increase in revenue of 15.5 percent for an average North American bank. Middle market has 10.3 and 11.1 percent increases, respectively.
As previously stated, a lack of systems integration is a big problem across the board for banks and a major hindrance to their efforts to start leveraging data. Almost every attendee spoke to this pain point and the CEB Commercial Banking Data Showcase Survey indicated that managing where data is housed and accessing data for analysis are the top two priorities for the sales process. Some specific data-driven insights articulated as priorities include establishing strategies for effective cross-selling to increase wallet share, better arming relationship managers for client interactions, developing a singular voice of the customer and understanding customer behaviors to help anticipate needs.
However, even new and improved customer data processes are only as good as the data which is being collected. Therefore, a sound data strategy requires that banks understand and embrace how customer interactions will occur moving forward. Without a doubt, the increasingly preferred communications platform for banking customers is both digital and mobile, and the statistics that emphasize this trend are undeniable.
Forty-three percent of U.S. consumers are applying for new bank accounts, credit cards, loans or brokerage accounts from their mobile device, according to a 2016 Consumers and Mobile Financial Services Report. This was an increase from 39 percent a year earlier. Twenty percent of Millennials and 14 percent of Gen Xers apply for a new account or loan using a mobile device, while only 2 percent of Boomers do the same.
How can such a mobile disparity exist between generations? Because the behavioral characteristics and service expectations of commercial banking customers is shifting as rapidly as the age demographic of business owners overall. Millennial and gen-X borrowers don’t want to endure the indifferent, multi-day, multi-form approval process their parents did. The time-intensive, oak-desk dialogue over capital needs, loan rates and creditworthiness will soon be supplanted by a side-by-side, personalized experience—a mobile, “park bench” interaction. This digital exchange will supply business owners with the capital they need to succeed and commercial banks with the new customers and actionable data points they want to expand their market presence.
Part of the negative perception of banks after the Great Recession is that they negotiate from a distant position of power and are disinterested in having a balanced and transparent conversation about lending. Because of the advent of mass personalization, customers want to feel that their time and specific borrowing conditions are not only understood, but also valued. And since bankers presumably enter the industry to financially and emotionally help people with their business ventures, these types of park bench personal interactions will be more professionally and personally rewarding.
As trillions of dollars in personal and commercial assets begin to transfer from Boomers to younger generations, a massive opportunity exists for banks who adopt the technologies necessary to seize it. Case in point: Boston Consulting Group believes that commercial banking winners may realize a profit upside of 40 percent or more, while “digital laggards” could see their bottom line erode by as much as 35 percent. Early adopters of these mobile and digital technologies won’t only be better prepared for the next generation of bankers. They will also have inherently better customer data to pull from, consistently improving the quality of customer relations and successfully addressing the pain points and priorities expressed at the CEB Showcase.
 CEB 2015 Financial Services Small Business Industry Benchmark, CEB 2015 Financial Services Middle Market Industry Benchmark