With the rise of fintech and digital transformation, financial institutions across the globe are bracing for increased competition as more fintech companies, community banks, and commercial banks employ increased automation to deliver a better customer experience.

The new year promises the race to provide faster, more convenient, and more affordable financial services, and products through new technologies will be on-running. According to a recent BAI Banking Strategies Executive Report, most banks feel their digital banking experience should be more compelling. Banking customers agree, with more than 70% of millennials and Gen Z respondents reporting they’d change banks if it gets them better digital banking services.  

So, without further delay, let’s look at the top business banking trends for 2023, and which past business banking trends are succeeding or failing in the new year.

1. It’s all about customer experience

Last year, the world emerged from the pandemic much more tech-savvy—with pandemic-learned habits forever changing how customers conducted financial transactions. In addition, as millennial and Gen Z customers age, their financial needs grow beyond a simple checking account, creating new opportunities for the financial services industry to woo and retain a broader client base.

According to the BAI report, new customer acquisition will remain a top priority for the banking industry in 2023. How can financial institutions attract the younger generations as new banking customers? BAI respondents report a solid digital banking component is crucial, with younger customers (73% of Gen Z respondents) citing new technologies as a key reason they’d consider switching their financial institution. Millennial customers agree, with 70% reporting they would change banks for a better banking app, up from 63% in 2021.

Clearly, mobile banking is a crucial component of the customer experience, and the benefits work both ways. Data extracted through artificial intelligence, and machine learning algorithms, make the customer’s banking app a valuable information resource. With real-time data analysis at their fingertips, providers can improve existing financial services and products and create new ones to continually better customer experience.

2. Banking industry reputation

According to the BAI report, the organization’s reputation and perceived values are another important banking trend for 2023, especially for Gen Z and millennial business owners. Younger banking customers want to support financial institutions that share their beliefs and create strong policies to promote those values.

For example, 2023 is sure to see an increased demand for banks to prioritize social responsibility, such as sustainability. Financial institutions creating low-carbon initiatives and offering products and financial services that support environmental, social, and governance (ESG) principles, will benefit highly from business customers desiring a bank that employs sustainable finance. Sustainable finance is defined as investment decisions that consider the ESG factors of economic activity or project, factors such as climate change, human and animal rights, and more.

Organizations searching for ways to stand out from traditional banks (especially community banks and credit unions) would do well to communicate ESG values across all marketing channels, including social media.

3. Open banking

More and more business customers are providing access to real-time transactional data, which continues to revolutionize and improve how financial institutions interact with their customers. Although open banking (or “open bank data”) has existed for many years, new technologies are accelerating, creating better quality mobile banking, interfaces, and more.

Open banking gives financial service providers access to large quantities of business banking data from institutions across the banking sector using APIs (application programming interfaces). According to FinTech magazine, open banking will have an even more significant effect than previously as we go into 2023. Consumers and businesses facing a possible recession will look to their banking institutions to provide the information and guidance to secure financial confidence. Fortunately, respondents to the most recent Open Banking Impact Report believe open banking has provided “more immediate and accurate insights into their financial position.” Good news for financial institutions and their satisfaction ratings.

FinTech believes 2023 will be another strong year for open banking as the financial services industry seeks ways to use technology and the invaluable data open banking provides to help businesses navigate an uncertain economy. 

4. Increased digitalization of the business banking experience

As with consumer customers, business banking clients come in all shapes and sizes. Different industries have different needs, as do sole proprietorships and corporations. Luckily, just as consumers have embraced automation and digital banking solutions, so too have business organizations, which opens the field for how financial institutions can best serve their business clients.

For example, banks have reduced their “cost-to-serve” by transferring a high share of business banking customer activities to digital channels, such as opening new accounts and onboarding for the lending process.

While antiquated back-office processes can slow down a bank’s ability to support business banking customers efficiently, sophisticated digital transformation can be the solution to serve businesses competently and profitably.

Since providing capital to business clients is one of a bank’s most essential services, it’s important to point out community banks that have adopted new technologies have higher ratios of loans to assets, more growth, and better performance, according to an FDIC Community Banking Study. Increased digitization in the lending process, such as employing a business lending platform, allow financial institutions to streamline operations, control risk management, and amass crucial data to serve their customers better.

The key elements in any business lending platform are the tools that make loan automation faster while adhering to current regulatory statutes. In addition, digitization should eliminate human error, improve credit decisions, and give lenders a comprehensive view of the business’s credit health.  

5. Multimodal customer service experiences

To fully engage customers and provide the best banking experience, financial services providers will be expected to create a multimodal experience so customers interact with the provider through one channel and transition to another channel without interruption. Today, customers are comfortable going on their smartphones for self-service, but when that option fails to provide the information needed, alternative options should be available without having to start over.

For example, the increasing adoption of chatbots and prompts are helpful for initial guidance but can be frustrating when the boilerplate conversation is too vague or does not provide the needed solution. An efficient multimodal experience will offer live chat or phone numbers where the customer doesn’t need to start the conversation over or at least gets them to the right expert help instead of getting transferred around.

A quick note on digital currencies

With the FTX fraud indictment still fresh, it’s difficult to say when cryptocurrencies will flourish again. According to experts, cryptocurrency and blockchain have long been on the verge of legitimacy in financial services. In 2023, the trend for regulation and transparency is expected to grow, and more financial institutions are expected to engage with crypto to provide their clients with services.

Fintech and beyond

With the lingering effects of the pandemic in financial sectors and employee shortages, digitization will be even more critical to business banking in 2023. Deloitte’s 2023 Banking and Capital Markets Outlook report shows that customers will expect more from their banks, particularly guidance during challenging economic times. Institutions must create cross-channel data-driven customer experiences offering personalized advice. And, not to be overlooked, customers want transparency and the institution’s values to align with their social conscience. For business customers, having access to lending services and products will mean more in the coming recession. With digital solutions such as Biz2X Business Lending Platform, lenders can streamline operations, control risk management, and gather crucial data to serve their customers and their communities better.