By Fiona Roach Canning

SMBs account for around one-fifth ($850 billion) of global banking revenues, with annual growth predicted to reach up to 10 percent over the next five years1. This is a critical revenue stream that banks can’t ignore.

Customer expectations of digital services are being shaped by the battle to become the SuperApp of choice; becoming the single marketplace and closed-loop ecosystem for users every need (e.g. Apple). SMB banking is just one sector that is being disrupted by this model, with new challenger banks, FinTechs, and digital disruptors focused on creating experiences that drive customer primacy.

Harnessing the power of data
Traditional banks already have the assets needed to respond and secure customer primacy. They have an established product and distribution advantage, backed by a wealth of customer data that can drive new experiences and interactions. The key to success is harnessing this data, at speed and scale, but if traditional banks fall short in delivering a competitive offering, this could open the door to digital disruptors who excel at experience.

Our global research among nearly 1,000 business banking leaders shows a disconnect among the wealth of customer data traditional banks can access and how they use it to build relationships. The majority of traditional banks in Canada (74 percent) rank collecting data as a key strength, but 37 percent reveal they have lost customers because they cannot offer SMBs the data and insights they require about their business.

In order to build data-driven experiences at the required scale and pace for the modern market, any investment by traditional banks needs to be focused on collaboration, both internally and externally, including securing strong partnerships with FinTechs that can work as smart partners, and accelerate and elevate the delivery of data-led experiences.

Currently, 95 percent of Canadian banks recognize the need to work with capable FinTech partners, who they trust. However, traditional banks and competitors differ in why these partnerships are created. In Canada, 17 percent of traditional banks partner with FinTechs collaboratively to build specific digital solutions from scratch, compared to 60 percent of challenger banks, and 50 percent of neobanks.

Banks need FinTech partners that go far beyond a basic transactional relationship or plugging in services. They want smart partners who can build alliances based on key qualities including safety and security; working collaboratively; being a trusted partner; understanding business needs; sharing financial expertise, and advising on security or compliance. Smart partners work collaboratively to not just implement tech, but also create a successful business for the bank.

Investing in such deep relationships with FinTech partners can play a fundamental role in the rapid deployment of data-driven experiences, which will be key to traditional banks gaining a critical advantage in the fight for customer primacy.

Traditional banks have the ingredients of success, now they must focus investment on harnessing the power of their data through smart partnerships. With the right strategy and partners, traditional banks can gain a long-term competitive advantage and overcome the threat from disruptors.

*Source: McKinsey’s Global Banking Annual Review 2021

Fiona Roach Canning is Co-Founder and President of Pollinate, leading Product, Marketing, Sales and Solutions. Her career has included working on the launch of Egg, the first internet bank in 1998, running European Insights for Visa, and leading operations and customer experience for Nectar, the UK’s largest and most successful loyalty scheme, with 20 million members. Fiona has been named one of the UK’s top 30 female entrepreneurs by the FT and one of the Top 25 Women Leaders in European Financial Technology, as well as being one of Beauhurst’s 50 Female Entrepreneurs to Watch. She is also featured in the 2021 Women in FinTech Powerlist.

Previous post

QuadFi's Borderless Financial Product a first for Global Immigrants to Drive Financial Inclusion

Next post

How Banking-as-a-Service (BaaS) Can Fuel the Future of International B2B Payments

Editor

Editor