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How Banks Can Compete With Fintechs in the Digital Business Payments Market

Business payments are undergoing a digital transformation, as more and more companies seek faster, cheaper and more convenient ways to send and receive money. Banks, which have traditionally dominated the commercial payments sector, are facing increasing competition from fintechs that offer innovative solutions and better customer experience. How can banks keep up with the changing needs and preferences of their business clients? Here are some key strategies that banks can adopt to match fintechs in the digital business payments market.

Enhance Cash Management Services

One of the main challenges that businesses face in managing their payments is keeping track of their cash flow and liquidity. Businesses need real-time and accurate information on their cash position, as well as tools to forecast and optimize their cash flow. Fintechs have been able to provide such services by leveraging data analytics, artificial intelligence and cloud computing. Banks, on the other hand, have often lagged behind in offering comprehensive and user-friendly cash management solutions.

To bridge this gap, banks need to invest in enhancing their cash management services, by integrating them with their core banking systems, offering more functionalities and features, and improving their user interface and design. Banks can also partner with fintechs that specialize in cash management solutions, such as Kyriba or Trovata, to leverage their expertise and technology. By doing so, banks can provide their business clients with better visibility and control over their cash flow, as well as insights and recommendations to improve their financial performance.

How Banks Can Compete With Fintechs in the Digital Business Payments Market

Embrace Open Banking and APIs

Another way that fintechs have been able to disrupt the business payments market is by embracing open banking and APIs (application programming interfaces). Open banking refers to the practice of allowing third-party providers to access bank data and offer financial services to customers, with their consent. APIs are the technical means by which this access is enabled and facilitated. Fintechs have been using open banking and APIs to offer a range of services to businesses, such as payment initiation, account aggregation, invoice financing, foreign exchange and cross-border payments.

Banks can also benefit from open banking and APIs, by using them to expand their product offerings, reach new markets and segments, and enhance their customer experience. Banks can either develop their own APIs or use existing ones from fintechs or other providers. For example, Stripe offers a suite of APIs that enable businesses to accept online payments, manage subscriptions, issue cards and more. Plaid offers an API that connects bank accounts with fintech apps, allowing businesses to access financial data and initiate payments. By using open banking and APIs, banks can offer more choice, convenience and value to their business clients.

Focus on Customer Experience

One of the main advantages that fintechs have over banks is their superior customer experience. Fintechs have been able to design their products and services with the customer in mind, by offering simple, intuitive and personalized interfaces, seamless integration with other platforms and tools, and responsive and proactive customer support. Fintechs have also been able to leverage data and feedback to continuously improve their products and services, as well as tailor them to the specific needs and preferences of different segments and niches.

Banks need to focus on improving their customer experience as well, by adopting a customer-centric approach to their product development and delivery. Banks need to understand the pain points and expectations of their business clients, as well as their behavior and preferences. Banks need to use data and analytics to segment their customers and offer customized solutions. Banks need to test and iterate their products and services based on customer feedback. Banks need to ensure that their products and services are easy to use, reliable and secure. By focusing on customer experience, banks can increase their customer satisfaction, loyalty and retention.

Business payments are a lucrative opportunity for banks, but they also face significant competition from fintechs that offer innovative solutions and better customer experience. To compete effectively in the digital business payments market, banks need to enhance their cash management services, embrace open banking and APIs, and focus on customer experience. By doing so, banks can provide more value to their business clients, as well as differentiate themselves from fintechs.

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