I recently hired the head of product management for our next generation commercial banking platform. He won me over during the interview with his personal story:
"My dad owned his own construction company for over 40 years. He was the typical small business owner who wore many hats – salesperson, foreman, purchaser, and bookkeeper. One of his key roles each hectic day was that of company treasurer. Small businesses
live and die by their cash flow. It is the difference between having enough money each week to pay workers, or not; to have a sufficient inventory, or not. Dad used a very unsophisticated accounting system: 10-column ledger paper. He paid his bills and his
employees with paper checks and received the same from his customers. He sometimes needed to borrow against his line of credit for larger jobs, or to take advantage of a great deal on materials for the company's inventory. At any given point, he knew exactly
how much money was coming in or out of his small business account at the local bank.
My job experiences have given me further insights into the larger corporate world, having worked in the Accounting and Finance departments of major corporations. Large corporations have different teams who are responsible for accounting, accounts receivables
and payables, payroll and treasury. Yet these same large corporations actually have similar working capital needs as small businesses do, just with much more complex cash flows. Corporations maintain several accounting, cash management and payroll systems
to manage their payments and collections. They handle checks, wire transfers and automated clearinghouse (ACH) transactions. They maintain multiple banking relationships to meet their financial needs, ranging from day-to-day cash flows to debt and equity issuance.
All the while, they must meet the demands of their many stakeholders, including internal business partners, vendors, investors and debt holders."
He nailed it. Small businesses and large corporations (and all points in between) differ in size and complexity, but they all have the same essential Commercial Banking needs on a day-to-day basis:
- Make payments
- Receive payments
- Get information
- Invest funds
- Borrow funds
Business customers see things this way, and in turn, they want their banking services to be aligned accordingly – and simply. Whether running a small or large business, there are only so many hours in the day to manage the company. Businesses of all sizes
need all the help they can get to manage their money; cash is still king in today's business world.
Banking partners can provide solutions to help optimize cash flow and maximize profitability. Banks can bring trusted advice and technology to the table to meet the wants and needs of any business. The key is how to deliver the end-to-end solutions in way
that makes it easy to buy and easy to use for businesses.
So what is the "secret sauce" for crafting a successful strategy in Commercial Banking? The winning recipe blends the points of views of customers, banks, and fintechs; mixes in what is possible using technology; and then tops off with an end-to-end ecosystem
for banks to deliver solutions to businesses. Stay tuned. More to come. You will like how it tastes.