March 2014

Business Banking Technology Race Already Won?
Representing some of the most well capitalised and highly valued banks on the globe, attention is swiftly turning towards how Australian banks intend to maintain sustained, meteoric growth.

Regulatory pressure is expected to be a natural impediment to short term gains in the interest of long term stability, yet it appears merchant payments and technology innovation is the new battle ground for business banking supremacy. The methods by which businesses interact with banks are fundamentally changing.

Some banks have anticipated this change faster than others following a protracted battle for deposits, extensive cost cutting and operational restructuring phase which itself shows no sign of abating.

The Big Four and regionals are successfully building on traditional transaction banking and trade finance foundations through greater investment in digital technologic innovation. CFO’s and treasurers of Australian businesses utilise newly released mobile and tablet technology in their own personal capacity, creating a discernible expectation their bank can do the same for their business banking solutions.

Banks are in no way backwards in coming forwards in the race to arm their customers with the latest and greatest in business banking mod-cons, going to considerable lengths to position themselves at the forefront of mobile and ‘forward thinking’ payment processing technology.

But who is winning the race? Social media and mobile technology innovation is often labelled as dehumanising or contributing to heightened isolation, yet business banking development in this field is achieving the opposite. Closer interaction between banks and their customers is tabled as one of the most significant achievements of moves to support customer’s growth aspirations.
The most populous small businesses segment is predicted to benefit the most from moves to incorporate multiple processes and streamline customer purchases and accounting requirements with mobile devices.

Liquidity constraints are repeatedly nominated as a major barrier to further growth, adding further importance to smooth payments processing and transactional banking improvements that are cost effective and easily implementable. Rising competition from standalone payments providers such as Skrill, PayPal and even Bitcoin wallets will struggle to compete with the perceived stability and reliability superiority still offered by banks.

East & Partners surveys over two thousand merchants on what their perceived payment technology priorities for the next two years include as a part of the biannual Merchant Payments report. The latest research released in December 2013 indicates a clear preference towards mobile phone payments proliferation, jumping from 16.0 percent to 60.7 percent since 2009.

Contactless payments remain a focus area for merchants, outranking security technology and online transaction reporting and management. The need to monitor core business processes and interact with the bank on product and service needs is paramount to future growth prospects.

Responsiveness to rising customer expectations and pre-empting innovative improvements will determine which bank maximises customer retention and drive new customer acquisition faster than the rest.

Lower payment processing costs, improved customer satisfaction and ultimately better control over cash flow and payment services for customers is the key to harnessing a long awaited pick up in business banking lending and growth.
Merchants’ Perceived Payment Technology Priorities in the Next Two Years
% of Merchants
  Dec 2013
(N: 2,247)
Contactless 92.6
Mobile phone payments 60.7
Security / fraud technology 40.2

Note: Results sum to more than 100 percent due to multiple responding
Source: East & Partners Merchant Payments Program


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