Why Digitally Mature Banks Will Win the 2022 Business Boom

Sal Trifilio

Sal Trifilio

February 11, 2022

WhyDigitallyMature_Blog_02Today’s economy feels a little bit like a Rorschach test. While inflation is spiking, worrying many, there is real reason to be optimistic about 2022’s economic prospects.

As Ezra Klein recently pointed out on his podcast for the New York Times:

Last year the U.S. Economy grew 5.7 percent, the largest annual increase since 1984. Since 1984. Unemployment plummeted. Workers, and especially low-income workers—they saw massive wage gains. New businesses formed at record rates. Poverty fell below pre-pandemic levels. It’s wild. Savings skyrocketed. Bankruptcies are way down. This is great news and not expected, not inevitable, and definitely not to be taken for granted politically or economically.

Another reason to be optimistic: It’s not just economists and people who get paid to write about the economy like Ezra, who are seeing the boom.

All of this economic activity is driving up a ton of momentum in the market. And while Commercial and Industrial lending took a hit as the Paycheck Protection Program provided an alternative to sustain businesses throughout the worst parts of the pandemic, today, financial institutions are starting to see an uptick in demand for C&I loans once more.

In part, that’s because current supply chain constraints are causing many businesses to rebuild inventory, while others are expanding, as Justin Ho recently reported for Marketplace. The uptick in C&I lending was first noticed in the close out of 2021, and the growth has been sustained throughout the first quarter of this year, according to Reuters.

With businesses optimistic about their 2022 prospects, there’s a big opportunity for banks and credit unions to find growth through this channel.

However, doing so will require a level of digital maturity—meaning financial institutions need to be prepared to both meet businesses’ lending needs, as well as their shifting expectations for customer experience.

Banks and credit unions that have invested in a digital loan origination system, or similar lending platforms, will have three distinct advantages over their traditional competitors in 2022:

  • Keeping current customers: When the pandemic forced business owners to digital channels, it had the effect of making them re-evaluate their relationship with their financial institution in a way like never before. As a Bain & Company study showed, the result was “more hidden defection of consumers buying products from banks and providers other than the primary bank.” Digitally mature institutions that can provide quality, digital business banking experience will decrease the likelihood of “hidden defections” and increase their chances of keeping current business customers.
  • Attracting new business customers: As we recently reported, a BAI Banking Outlook Survey found that just 76 percent of consumers feel their regional bank understands their digital needs. That number fell to 61 percent in the context of community banks and credit unions. Meanwhile, new data shows that almost half of all Americans considered switching banks in 2021. As business owners search for banks that can provide omni-channel support, speed, and a best-in-class customer experiences, it’s digitally mature institutions that will garner their attention and business.
  • Growing business banking relationships: Customers want to work with financial institutions that make business banking easy. A digital loan origination system with a focus on user experience accomplishes this by eliminating much of the work required of borrowers and bankers for everything from term loans to opening new deposit accounts. By leveraging these kinds of lending platforms, digitally mature banks and credit unions can make it easy for customers to switch to their institution and to enable current customers to do more with them. By increasing efficiencies and lowering the barriers to doing business, these institutions can effectively grow commercial relationships in a way their traditional competitors cannot.

For banks and credit unions that haven’t yet made a digital transformation in business banking, there’s still time.

Numerated is a digital LOS built by bankers for bankers, and is tailor made for your business banking needs. As a cloud-based SaaS platform, the Numerated Digital LOS can be quickly deployed to meet an institution’s pressing needs.

Amerant Bank, the second-largest community bank headquartered in Florida, for example, saw digital transformation as key to their ability to further diversify and grow their business banking foothold. With Numerated, they were able to realize a time to value of just 72 days.

Learn more about how banks like Amerant are set up to win 2022’s business boom by downloading our case study, here.

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