Banking data analytics could give traditional financial institutions an important advantage as fintech companies increase their focus on the small and medium-sized business market. Barclays is using transaction and card payment data to provide business customers with insights that can help them better understand their operations and identify potential opportunities.
For banks, the value of transactional data can extend beyond processing payments and maintaining accounts. By turning information about business activity into practical insights, financial institutions can develop more consultative relationships with SME customers and demonstrate value that extends beyond the cost of traditional banking services.
Creating closer partnering-style relationships will be one way traditional banks may be able to forefend the onslaught of fintech firms in the SME marketplace. The article outlines how Barclays is leveraging transactional data to provide its clients with strategic consulting –type services.
The tool will analyse business banking and card payment transactions to present data and intelligent insights to help customers manage and grow their business, identify opportunities and provide a strong factual basis for businesses to action or make crucial decisions.
Transaction Data Could Give Traditional Banks an Advantage
Mercator Advisory Group believes traditional banks are well positioned to leverage their positions as established players in the local economies, with their knowledge of the particular tides and seasonality of business activity by neighborhood. By demonstrating value-add with business insights, traditional banks can differentiate from less costly alternative financial institutions and thereby preserve business relationships.
Traditional financial institutions possess extensive information about how their business customers receive payments, manage cash flow, and conduct transactions. Combining that information with knowledge of local markets could allow banks to provide insights that newer financial services competitors may find difficult to replicate.
Banking data analytics could therefore become an important tool for strengthening SME banking relationships. Rather than competing with alternative providers primarily on price, banks can use their existing customer relationships and transactional information to deliver more personalized guidance. Demonstrating that type of value could help traditional institutions deepen customer relationships while differentiating their business banking services from emerging fintech competitors.
Overview by Joseph Walent, Senior Analyst, Emerging Technologies at Mercator Advisory Group
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