The time has arrived to take millennials seriously as business banking customers, especially now that they represent the largest demographic segment in the U.S. workforce.
The key is to provide their business banking needs in as simple, intuitive, and easy way as possible, particularly through appropriate design of digital banking access.
“The main thing banks, in general, need to change is their inside-out focus on lots and lots and lots of products with lots and lots and lots of jargony names that smaller businesses and nonfinancial professionals don’t relate to,” says Norm DeLuca, general manager of digital banking at Bottomline Technologies, in an interview with Banking Exchange.
Rebuilding the customer experience
“The huge thing we’re trying to convince banks of is that the customer experience is really the solution. All the different products and services are secondary to the ease and simplicity of the experience of doing business with them,” DeLuca explains. Bottomline Technologies specializes in business-to-business digital solutions.
To illustrate the need to find a common language in which to communicate, DeLuca refers to focus groups Bottomline did with small- to medium-sized business owners.
As an example, DeLuca points to when a focus group interviewer mentions ACH, or automated clearinghouse, the standard way of transferring money by wire. Completely understandable to a banker. Not necessarily clear to a business owner.
“I’ve heard some of them in focus groups ask what ʻatch’ is when they look at their banking websites,” he says.
DeLuca says that there are 2 million businesses of all sizes that desperately need cash management services. Many of these small- to medium-sized companies are owned or run by millennials. Banks that ignore the needs of these millennial businesses put themselves at enormous risk of losing customers.
“Tie the bank in with my systems”
In consultation with The Center for Generational Kinetics, Bottomline surveyed several hundred business owners and financial decision makers, most of whom were from small- to medium-sized companies. The research found that:
• 83% of millennial business decision makers believe that the right commercial banking relationship can make or break their company’s success.
• 66% of millennial business banking decision makers are on the lookout for other banks that can provide a larger variety of business services and tools.
• 53% of millennial business decision makers are already using nonbank providers for core bank services.
What millennial owners want now
So what is it specifically that millennials desire from business banks? The research points to offerings that would lead them to switch institutions if some other bank offered them. Respondents indicated that they’d like to see many of the following synchronized with their own accounting systems:
• Accounts receivable tools that create and send invoices and receive payments.
• Providing accounts payable tools and software that manages payments, payroll, and expenses.
• Providing a business planning framework and tools.
• Providing real-time cash flow forecasting and planning tools.
• Providing performance management tools and software that track and report actual accomplishments against business performance goals.
• Providing a secure website to manage their business account and add, change, or remove services.
• Providing access to a trusted online community of services that help manage their business. (Examples include insurance, office supplies, and temporary staffing.)
Tying in with the firm’s accounting system “is an incredibly important issue,” DeLuca says.
“We have seen and heard it loud and clear from so many different businesses and business owners. Owners really struggle with the ʻwhite space’ between their online banking system and accounting system,” says DeLuca. “I’ve seen the frustration, the time that’s wasted, the inaccuracies that take place because they can’t really get one synchronized view of their cash position and their cash needs, their payables and receivables, in a simple form.”
Eliminate financial spaghetti
DeLuca gives an example of an owner of a $10 million professional services firm who is an early adopter of all sorts of services meant to make her business simpler—Quickbooks, Dwolla, Square, to name a few.
“Her comment was: ʻMy fantasy is that someone jams all of our favorite things together and makes them work for us’,” DeLuca says. Meaning, that even though all these services in themselves may be simple and effective, “the net effect of it was to make her life even more complex.”
Here is how DeLuca describes, in general, how a bank’s digital banking platform should look:
“All of the different bank products and services would be relegated to the back pages. What we would lead with would be a very simple, customized snapshot of where that business stands on what matters most, which is its cash position and its cash needs, in a way that is real-time, synchronized, and inclusive of all of the applications.”
That digested, centralized view is the most important thing, DeLuca explains: “A starting point, rather than a landing page or home page that is cluttered with lots of different products and services.”
Of course there would be more to it, once the customer decides to dive deeper. In particular, there is the need to integrate third-party services seamlessly, balancing between giving the customer access to the various outside services while capitalizing on the bank’s own brand equity.
“It’s very important to innovate through partnering with third parties,” DeLuca says. “Your bank simply can’t keep pace without it. What banks need to do is stay focused on primary ownership of the customer relationship and the value that comes from that.”
Think like a digital player
Make no mistake, he says: Millennials do value banks. It’s just that the depth of that value isn’t as deep as it used to be—and could be.
“It is difficult and undesirable to switch banks,” DeLuca points out. “There is still a need for a bank or banks. There still is a reasonably high degree of trust in banks as stewards of assets and information, relative to other categories or other industries.
“Those advantages still exist for banks,” adds DeLuca. “But they are less of an advantage than they used to be.”
Compounding this is the finding, in Bottomline’s research, that only about 16% of millennials prefer to have in-person consultations with bankers, presumably at branches.
Which begs the question: How can a bank reach a millennial business owner if he or she won’t talk?
It turns out that a unique feature of the millennial generation, at least in its ubiquity, is that this generation chooses to communicate digitally. This is true with other demographics, but not to the extent it is with millennials, DeLuca says.
“The difference now is, the millennial generation doesn’t have any starting expectations that they have to do business with someone in person,” he says. “They are conditioned to actually prefer a digital interaction in most cases, and especially a mobile interaction. That turns into a lower cost of service for banks, and it provides them with an opportunity to better serve the small- to medium-sized business segment.”
Service, simplicity, and timeliness are the keys to reaching the millennial business owner. In a nutshell, Bottomline lists these factors:
• Consolidating and simplifying financial tools and services.
• Improving cash flow through automation.
• Presenting a fully integrated picture of a business’ current cash position.
In conclusion, DeLuca says: “What’s different is this is a generation that has been exclusively and fully immersed in a digital experience first, with the high expectations that along with that there is no difference in how they run their personal lives and the expectations they have for digital intermediaries, and how they run businesses.”
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