The Key to Successful Commercial Banking Lies In Consumerization. Here’s Why

Jacob Leick and Mandy Lopez explore the consumerization of commercial banking, the importance of personalization and relationships and the role of technology in helping community banks and credit unions stay competitive.

In today’s rapidly evolving commercial banking landscape, community banks and credit unions face many challenges and opportunities as they strive to meet their business clients’ changing needs and expectations.

To shed light on the latest trends and strategies for success, The Financial Brand’s Jim Marous was joined by two industry experts from Alkami Technology on the Banking Transformed podcast: Jacob Leick, director of product management and Mandy Lopez, lead product manager.

In this insightful Q&A, Leick and Lopez share their wealth of knowledge and experience, exploring topics such as the consumerization of commercial banking, the importance of building strong relationships, maximizing revenue impact while reducing back-office expenses and leveraging technology to level the playing field with larger competitors.

As the business banking landscape transforms, this discussion provides invaluable guidance for community banks and credit unions looking to thrive in the years ahead.

The Impact of Consumerization on Business Banking

Q: What market trends and challenges are you seeing in the commercial and business banking landscape for community institutions?

Jacob Leick: I believe that consumerization in financial services will be a major changing force in the next few years. Consumerization is basically a technology that has ultimately shifted and moved into the enterprise sector. There are some good examples of changing an entire industry.

One is iPhones, for example. If you remember when iPhones first came out, everyone loved them. It was great. You could take pictures, listen to music, all the cool things that you want to do in your personal life. But meanwhile, firms, businesses and banks are still issuing BlackBerrys. But now, we use our personal phones for work — and it’s almost like you can’t imagine life without them.

That same thing is happening, I believe, in banking right now, specifically in the commercial space. These regional community financial institutions need to understand that who they’re dealing with is not an extraordinarily sophisticated commercial entity. It’s a person on the other end.

Personalization: The Key to Acquiring Operating Accounts

Q: What challenges and opportunities do you see for banks and credit unions when trying to acquire a business’s operating account?

Mandy Lopez: Traditionally, community financial institutions have had an uphill battle winning those operating accounts away from the mega banks. It’s mostly due to more favorable lending terms. Recent market data from DataInsights show that business clients are open to new financial provider relationships. Less than 25% of mid-size and large enterprises say their current FI’s treasury management and payment capabilities fully meet their needs.

Further, two-thirds of small and medium-sized businesses (also known as SMBs in the industry) are somewhat or very likely to look for new banking relationships within the next 12 months. Better used to mean more functionality with their digital banking platform, almost always at the cost of a friendly user experience. And you know what? Those days are changing.

Read more about business banking stratgies:

Q: How important is the ability to personalize the experience on the commercial side and find revenue opportunities from the personalization perspective?

Leick: I think it’s absolutely critical. Mandy’s talking about operating accounts — and we all know that commercial operating accounts provide an institution with a really rich source of funding. I believe that personalization is the new battlefield for those deposits.

Personalization enables rich payment capabilities that ultimately allow businesses to save time. And at the end of the day, time is money. Whether you are a growing small business, you’re an entrepreneur, you’re the founder of a growing small business and you kind of naturally gravitate towards the path of least resistance.

Whether you are a growing small business, you’re an entrepreneur, you’re the founder of a growing small business and you kind of naturally gravitate towards the path of least resistance.

— Jacob Leick

I can tell you that you’re going to be more loyal to an institution that allows you to make payments faster. That can suggest new capabilities that you’re not leveraging that would add value to your operation. And you view annoying advertisements as something that kind of slows you down.

Q: How can community banks and credit unions today differentiate themselves in the business banking space beyond offering the best lending terms or personalization?

Lopez: I firmly believe in talent as well. I’ve managed a lot of teams in the past, and I have to say I have had the best treasury management teams on the face of the earth. But it’s really those experiences that they’re creating; they’re helping to win that business and not only win that business but retain it and keep it.

At the end of the day, businesses want to do their banking; they want to get in and they want to get out, but you make friends along the way and it turns into more than just a banking relationship. It’s “How are your kids? Let’s go golfing. Let’s have dinner. Let’s hang out.”

So, you start to develop these deep relationships with people, and you want that business to succeed. And you want to be a part of that success. A lot of that comes with honestly getting to know the people behind the business. To me, that is what really makes that winning combination.

Simplifying and Digitalizing the Back Office

Q: What challenges and opportunities do you see in simplifying and digitalizing the back office to reduce cost and make it so that the back office can digitally serve the front-facing glass of a banking relationship?

Leick: I think this relates to some of the things that Mandy touched on. We talked about there’s a huge opportunity for financial institutions — and with that opportunity comes rapid growth. Then, the back office becomes a bit of an issue because it becomes a problem for institutions when you’re growing very quickly. It’s a good problem to have, but also still a problem.

We challenge institutions respectfully by trying to rethink what constitutes exceptional service. Focusing the manual effort around things that build and deepen relationships, like what Mandy’s saying, is like using your talent for stuff like that, not just clicking buttons and setting stuff up manually. Those things don’t necessarily add value.

Learn more: Back-Office Overhaul Critical to Digital Transformation

We look at things like billing, whether it’s through account analysis or hard charge billing. That’s a very common task that is either manual — or institutions, in many cases, are not even doing because it’s just too costly to bill.

Another big one is administering and managing users. To an extent, when onboarding a new business, it makes sense for the institution to do it. But I would argue that it’s a much better experience empowering the actual business with the tools to set up and manage their own users.

“We challenge institutions respectfully by trying to rethink what constitutes exceptional service.”
— Jacob Leick

Q: What challenges and opportunities do you see today for banks and credit unions in the business FinTech ecosystem?

Lopez: It’s really an exciting time to be in finance and financial technology. I love to see how banking has evolved over the time I’ve been in it, which has been, I don’t know, gosh, I think about 30 years and counting.

I watched remote deposit capture come into existence in the early 2000s with the passing of Check 21, a huge opportunity. Around that same time, the Promontory Network, which is now known, I think, as IntraFi, started a CDARS program to allow a depositor to have fully insured funds across multiple FIs to stay under that $250,000 FDIC limit. Great opportunities there, too.

But the list goes on and on. There are underlying themes to all of these. Major life events drive the need for creativity and innovation — and with that lie these challenges and opportunities. As we continue to experience life events, like COVID-19, which was a major catalyst for change for the banking industry, I think Jacob touched on it earlier.

We are going to have to continue to be creative, to innovate, to rely on partners, to rely on ourselves and to maintain that human connection to keep those relationships and keep those businesses at the bank that they’re currently at.

The Future Landscape of Business Banking

Q: How do you foresee the landscape of business banking evolving in the next three years? What potential innovations and technology advancements do you anticipate shaping the future?

Lopez: If I were to take out my crystal ball and take a stab at one area in particular, it would be the data and power of these partnerships, which drive AI insights that, in turn, control the experience for the end user in a hyper-personalized way.

Banks need an intelligent, easy way of aggregating data, normalizing it and using it meaningfully. We have a product suite called Data and Marketing Solutions on our Alkami platform. What it really does is help the community financial institution distill very large bits of information into a personalized hub for data insights and key lifestyle indicators.

Flipping to the business side of the house, we partner with a company called upSWOT and it does something similar but with a twist for our business customers.

Upshot is a company that provides actionable insights, cash flow forecasting, key performance indicators and many other features to business users. These features are powered by the data within the applications that that business is connecting, such as Facebook, Amazon, CRM systems, QuickBooks and accounting reconciliation systems.

Leick: Well, as you know, the possibilities are truly endless. One thing is certain, and that is uncertainty. Rates are going up and down and we may have another global pandemic and a presidential election coming up. All these different things have major impacts.

So, I think our focus is on creating a platform that can respond very quickly. One important thing to us is that it’s not necessarily about the partnerships you have today. It’s being able to create new ones very quickly.

Because on a moment’s notice, we all, like Alkami, our competitors — and even financial institutions — may have to respond to something that we didn’t even know about a week ago. That’s what energizes us: being able to react and stay close to our clients.

For a longer version of this conversation, listen to “How Community Banks Can Win the Business Banking Battle,” an episode of the Banking Transformed podcast with Jim Marous, available here or wherever you get your podcasts. This Q&A has been edited and condensed for clarity.

Justin Estes is an award-winning writer, strategist, and financial marketing expert with expertise in banking, investments, and fintech. His clients include the NYSE, Franklin Templeton, Credit Karma, Citi and, UBS, and his work has appeared in Forbes, Barrons and ThinkAdvisor as well as The Financial Brand.

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