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Digital Banking

Business Banking Systems: Should You Have More Than One?

Tony Calderone
Nov 20, 2023

Isn’t running on a single platform always better than needing two different tools to deliver digital banking?

Not necessarily.

In retail banking, it makes sense to run a unified digital banking platform. Consumers have relatively similar needs as digital banking users. Most consumer-focused tools will meet their needs for spending, saving, borrowing, and planning – especially if your financial institution empowers these end-users with a variety of embedded tools that they can enable or disable themselves.

When it comes to business banking systems, it’s a different story.

A solopreneur has vastly different financial needs than a 10-employee small business, and a small business operates differently than a multi-million-dollar commercial enterprise.

Solopreneurs, gig economy workers, and early-stage startups

For these small- and micro-businesses, separating personal funds from business finances is key. Far from needing complex financial tools and feature-heavy (confusing) interfaces, this segment prefers free or low-cost digital tools that provide digital financial services that are just one step up from their retail digital banking – things like digital invoicing and payment acceptance.

Small-to-medium (SMB) businesses

With several different segments within the SMB audience, this set of businesses benefit from scalable digital technology that starts with the consumer-like interface they are comfortable with, but also has the option to scale up in terms of functionality. This audience may grow into needing basic payroll services, fraud (positive pay) services, and occasional wire transfers.

Commercial enterprises

With more complex financial needs, these businesses regularly need a more robust user experience, something that is purpose-driven. This experience and supporting services would include reporting, and tools like lockbox, a full suite of ACH capabilities, and full positive pay for ACH and checks. Because they’re likely using a general ledger or specialized accounting software, they need easy integrations between their digital banking and their business operations solutions and the ability to transfer data and files (such as bulk wire files) to avoid manual reentry and speed reconciliation.

With such unique needs to serve, attempting to shoehorn those different companies into a single digital experience could end up doing a disservice to most – if not all – of them.

Serving the full spectrum … with multiple solutions

If you want to develop a robust business digital banking program that attracts and serves businesses of all sizes, it’s time to evaluate whether you have the right tools in place to serve each of your business segments.

Digital banking tools that can scale as the business grows – like Banno Business™ – can take businesses a long way through their growth journey. It’s perfect for micro-businesses right up through most SMBs. On the other hand, true treasury management capabilities are needed for those businesses with complex financial needs.

Complexity, not size

So, how do you determine financial complexity when you can’t rely solely on a deposit or lending balance or the number of employees? Here are a few key indicators that a business is ready for a more robust solution:

  • They’re heavy users of wires, ACH, and transfers. Think multiple batches per week, hundreds or thousands of transactions per batch, or the need to send or receive EDI data with their ACH batch.
  • They have departments or dedicated individuals for payables, receivables, and finance. Their financials are being run by people who understand and specialize in finance. They’re likely to have employees with titles like Controller, Treasurer, CFO, or Corporate Accountant.
  • They have a large number of accounts. Viewing data across multiple relationships and understanding their true financial picture would be unwieldy in a traditional consumer digital format.
  • They require separation of duties and multiple approval levels. They’re serious about checks and balances and use multiple approval levels to ensure the security and integrity of their transactions.
  • They need robust financial reporting. They’re settling transactions for multiple locations each day, performing complex cash flow projections, or utilizing sweeps to optimize their earnings to the penny. This is increasingly important as borrowing and investing returns continue to rise.

In most cases, your relationship banking officers and commercial lenders can identify whether a business is a good candidate for more robust business banking services – especially when they know what to look for.

What if we went with one business banking system instead of multiple?

It is possible – and sometimes tempting – to consider using a single experience for all business accounts.

After all, it means that your organization only needs to support a single solution and your team can serve as digital banking support generalists rather than specialists. And, depending on the types of businesses you attract, that may be all that you need.

However, in practice, many community and regional banks and credit unions serve a diverse audience.

In that case, a single solution serving all business accountholders would be letting someone down. Experience expectations are different across the user spectrum. A less complex cash management system could frustrate larger commercial accountholders, validating their (too common) belief that community organizations can’t handle their needs, versus their national bank which offers multiple options.

On the other hand, using a treasury management system for all businesses could frustrate smaller business owners, who are passionate about executing on their business idea … not about learning the ins and outs of financial accounting and using tools that are far too complicated for their basic needs.

To serve the needs of the different businesses, you likely need the ability to manage, service, and tailor the solutions for each segment.

Finding the balance

For most banks and credit unions, finding the right balance boils down to really understanding your market and differentiating your business banking and service strategy.

If you’re aiming to grow your C&I portfolio to offset higher concentrations of CRE or residential lending portfolios, you’ll likely find that the businesses you want to attract will desire treasury management functionality. But if you’re focused on serving micro-businesses and the storefronts along Main Street, there’s a good chance that you’ll be safe with a single cash management platform like Banno Business.

There’s no one answer that’s right for every bank.

It all boils down to who you want to serve and how you can best meet their needs. If you’re keeping the needs of your target audience in mind, you can’t go wrong.

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