It won't be business as usual in 2018. Change is in the air in commercial banking, from new technologies and players to possible shifts in regulations and the tax code.
How credit unions respond to those changes will affect their bottom lines and ability to make inroads in the market.
Bolstered by a relatively positive economic outlook, expectations are that business will continue to perform favorably in the coming year.
That optimism bodes well for credit unions and other financial institutions because companies of all sizes will look for assistance growing and operating more efficiently.
In the coming year, look for commercial banking to remain a key profit center, especially for those that focus on robust cash management, commercial lending and money movement offerings.
Here are four trends to watch:
1. Digital experiences
Across our industry, we have an opportunity to use the best e-commerce practices to enhance commercial banking offerings, which typically lag behind retail banking capabilities.
Just like consumers, businesses of all sizes benefit from easy, intuitive digital financial services experiences. For example, an enhanced commercial cash management experience can provide a centralized point for business clients to check balances, perform internal transfers, and send and approve payments, whether the client is online or using a mobile device.
In the same way, financial institutions must be able to originate, decision, and close loans quickly and easily.
A streamlined and simplified loan origination process enables quicker approvals, which helps financial institutions attract and retain commercial accounts.
Closing a loan quickly has never been more important than it is in today's dynamic marketplace.
2. Data analytics
The vast amount of data organizations are mining to reveal insights, trends, and patterns—big data—will continue to have a big effect on commercial banking in 2018.
Strong data mining capabilities can provide key insights to maximize financial performance, from managing liquidity and money movement to facilitating quick access to credit.
A full-featured cash management portal provides a 360-degree portfolio view of activities to help businesses better understand performance metrics.
Because large corporations often have dozens of banking relationships, aggregating multiple applications in a more streamlined, cohesive manner helps businesses better understand where funds are and where they should be.
Twenty-five percent of businesses worry a great deal about cyber threats and data breaches, according to the 2017 Travelers Risk Index. Addressing those concerns will remain a top priority for commercial bankers in 2018 and beyond.
In 2017, we saw financial institutions increasingly incorporate additional security tools and applications to help deter fraud and security risks. That's not surprising given the number and severity of recent cyber threats.
Many institutions have started to assume their computers and workstations are already corrupted, and those organizations are seeking more secure ways to provide an added layer of security.
4. Payment speed and innovation
The commercial world centers on payments, money movement, and the associated remittance information. Because of the sheer volume of money changing hands, real-time payments are critical in the commercial space.
Businesses of all sizes increasingly demand faster payments, including real-time commercial transactions and access to funds.
According to 2017 research from Finextra and Dovetail (now part of Fiserv), 76% of financial institutions believe they must offer real-time payments to win new corporate business.
In the coming year, expect innovations in payment speed and message types to continue to reshape the commercial landscape.
Look for fintech companies and other providers to push various types of innovation in 2018.
Open banking and APIs offer greater flexibility and agility, enabling third parties to collaboratively deliver new products and services to the marketplace. As the industry becomes more open to that option, APIs will likely fill critical gaps to deliver an enhanced commercial banking digital experience for businesses.
Businesses of all sizes look to their financial institutions to meet critical financial needs. In a changing market defined by access to timely credit and comprehensive business services, credit unions must be more than deposit holders and instead offer the comprehensive tools businesses need to prosper.
Is your financial institution ready to meet those challenges and opportunities?
TROY LAND is senior vice president, product management, business banking, for Fiserv.