Shining a Light on the Commercial Banking and Payments Path

Shining a Light on the Commercial Banking and Payments Path

By Q2

8 Jun, 2023

The rest of 2023 and beyond is shaping up to be a time of more change for financial institutions (FIs) engaged in the commercial sector. Offering valuable illumination on what’s happening, Aite-Novarica’s Top 10 Trends in Commercial Banking & Payments, 2023, found a movement is underway to growth and connection—which is good news. At the same time, the research firm advised FIs that “stagnating is not an option, as the choices of cash management and payments solutions available to businesses of all sizes continue to grow in accessibility and availability.”

The Trends to Understand
In their research, analysts at Aite-Novarica found that 10 important trends are unfolding in commercial banking and payments. Each one is important, and some clearly stand out as critical for future success. 

•    Payments’ infrastructure now enables real-time everything. 
•    Sustainability is emerging as a new focus in commercial banking in payments. 
•    Lifecycle banking and enterprise resource planning (ERP) integration are critical. 
•    Investing in onboarding is becoming a competitive advantage. 
•    Interest in virtual account management is growing. 
•    Embedded lending is separating the haves from the have-nots. 
•    Fintech funding and enablement is slowing down. 
•    Demand for accounts payable solutions and automation is increasing. 
•    Business travel payments are returning.
•    Continued merger and acquisitions activity will impact IT spending. 

The trends related to instant payments (also known as real-time payments), ERP integration, and accounts payable processing caught Q2’s attention. At our CONNECT 23 event last month, many of our FIs expressed interest in the ways they could strategically capitalize on these trends. Examining what’s taking place around instant payments, ERP integration, and accounts payable processing, Aite-Novarica stressed:

Payments infrastructure now enables real-time everything. The infrastructure and solutions that enable instant payments are critical to improving operations, access to better data, and working capital. ISO 20022 initiatives are finally going live with notable scale and activity into 2023 and beyond. This will also contribute to real-time everything capabilities and drive market growth.

Lifecycle banking and ERP integration are critical. Lifecycle banking capabilities are executed according to the sector-specific process flows. They create, process, and store data specific to that sector. If the value of banking transactions resides in the data exchanged, lifecycle banking takes this value to its highest possible level.

Demand for accounts payable solutions and automation is increasing. FIs wanting to deepen business customer relationships will seek to provide services that support accounts payable’s invoice processing and payment needs. Customers sold solutions that primarily address accounts payable payments will chase the significant value offered when a full-service accounts payable ecosystem is presented.

Capitalizing on Digital Onboarding and Lending
Other trends conveyed as mission critical for FI success in commercial banking are onboarding and embedded lending. Q2, of course, has long championed the digital technologies and best practices to successfully onboard and conduct business lending, so we found these points from the report spot on:

Investing in onboarding starts to grow into a competitive advantage. Onboarding is going to become even more critical when it comes to the adoption of new customers. For those FIs that continue to lag, business customers will start looking to third parties and open banking initiatives to bypass the hassles they’ve come to expect during onboarding.

Embedded lending separates the haves from the have-nots. In the tricky game of SMB lending—where scale, speed, and throughput have been elusive for so long— early adopters of embedded lending will pull ahead of their competition. The transition won’t be seamless, and firms will have to overcome some cultural discomfort. By embracing APIs to access borrowers’ financial and operating data, these early adopters will deliver a superior borrower experience, obtain the data required to identify false credit negatives, and obtain sustainable scale.

See the Details on Each Trend
Again, all the trends defined by Aite-Novarica are important. If your bank or credit union wants to extend its digital presence in business banking and payments, download the report to better understand what is becoming the new commercial banking landscape. 
It’s highly likely you’ll come across something vital for your FI’s commercial banking effort. 


Written by Q2