Future Strategies for Business Banking Growth

Jim Marous (00:11):

Hello, and welcome to Banking Transformed. I'm your host, Jim Marous, owner and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:19):

In this episode of Banking Transformed, John Stuckey from FIS shares his insights on the evolving landscape of digital business banking and the strategies financial institutions are using to adopt future growth.

Jim Marous (00:34):

The discussion examines how market needs have evolved for business banking clients, the effect of a customer 360 perspective, the increasing influence of open banking on business financial relationships, and the way AI is transforming competitive dynamics.

Jim Marous (00:51):

John also delves into the competitive dynamics between FinTechs and traditional financial institutions, and how financial institutions must evolve beyond their digital solutions to meet the changing market demands.

Jim Marous (01:05):

From small businesses to large corporations, the demand for sophisticated digital banking solutions continues to grow. But in an increasingly competitive marketplace, how financial institutions ensure their digital solutions generally address the complex and evolving needs of today's businesses is what we're trying to get a handle on.

Jim Marous (01:28):

So, John, before we begin, can you share a little bit about your very diverse background and how your background prepared you for what you're doing at FIS today?

John Stuckey (01:38):

Absolutely. So, hi Jim, thanks for having me. I've been in the technology space my whole career in different positions from product to P&L ownership, and over the last five to six years, I've been here in the financial services industry at FIS. And at FIS, I've been in a number of our different payment teams, and then most recently, have owned the digital banking product team for our digital one business products.

John Stuckey (02:07):

So, I've had the opportunity to see banking from the payment side and how those payments then are delivered to business end users, and I'm excited to talk about that today.

Jim Marous (02:16):

So, John, you've been at FIS for a bit longer than five years. What are the most changes in market demand for digital banking solutions that you've seen? And how does this evolution actually move towards larger corporate clients as we've seen the years pass?

John Stuckey (02:36):

So, let's maybe talk about three things that I've seen. The first item that I've seen is the growing importance of the mobile app in the digital banking space. One of the things that I think we've found typically in banking in general is that the consumer space tends to lead with certain functionality and businesses will pick that up from a digital perspective later.

John Stuckey (03:01):

So, what we've started to see over the last few years is a large uptick in the usage of mobile apps, particularly among the smaller businesses, micro businesses and sole props. And that's starting even to stretch up to medium-sized businesses and to a lesser extent, larger businesses, particularly if they have someone that's out in the field. So, mobile would be first.

John Stuckey (03:22):

A second would be just the importance and emphasis on excellent user experience (UX). I think all of us have grown to expect a higher quality level of UX with all of the apps that we use on our mobile phones today, as well as the websites that we visit.

John Stuckey (03:43):

And so, while in the past, digital business banking maybe was more utilitarian in terms of what the apps themselves look like, now, there's an expectation that that user experience be very, very high level.

John Stuckey (03:57):

And then a third space for us to talk about is that we've really noticed the importance of interconnectivity between the types of applications that businesses use. In particular, the importance of merging between the banking environment in the accounting system or ERP environment.

John Stuckey (04:16):

And so, connectivity between banks and accounting systems has been a critical item that we've been adding into our portfolio over the last couple of years.

Jim Marous (04:26):

So, we talk a lot about personalization, and one thing that digital banking really allows us to do is capture and deploy, and really use data more effectively on a more instant basis. And when you talk about the concept of customer 360, how has that evolved in the financial services sector, and how has it impacted both small businesses as well as things like cash management solutions?

John Stuckey (04:57):

Yeah, so I think what we've found is that businesses today don't want to be treated in a one size fits all digital banking experience. There's such a huge difference between the needs of a restaurant versus the needs of a realtor, for example.

John Stuckey (05:15):

And so, the ability to tailor not just the services that you provide to those different types of businesses, but also to be able to tailor the experience so that you can provide them with data and insights that's very specific to the needs of their business.

John Stuckey (05:31):

And I think when you can do that as a bank, you build greater engagement with that business overall, you build better loyalty. So, the importance of that personalization at a business level, I think is becoming more and more critical.

Jim Marous (05:45):

It's interesting because when you look at the potential there, and it goes beyond just the financial services, it goes into other areas of collecting data to be able to deploy against small businesses. I know from my standpoint with my traditional financial institution, they don't quite get what I do, even though they can talk it better now.

Jim Marous (06:09):

And the reality is my relationship with PayPal, it's probably more personal because they get more of an idea as to how I deploy and how I accept funds, and how I pay my contractors, and what my business management ideas are. And they come up with solutions for me on a more frequent and truly a more engaging way.

Jim Marous (06:33):

Another thing that impacts small businesses and financial institutions is open banking. How have you seen open banking influences how businesses handle not just their cashflow across different relationships, but their management of relationships?

John Stuckey (06:51):

Yeah, there are so many different and exciting elements of open banking. So, if we use it from the perspective of how can we ensure that the data that a business owns at their bank, that they have the ability to share that data with other providers that they have outside of the banking universe.

John Stuckey (07:12):

You mentioned PayPal, that's a perfect example – but there are many, many others that leverage the power of different aggregators that are out in the space. And those aggregators, we partner with aggregators here at FIS to be able to send via API that banking data out to all of those partners.

John Stuckey (07:31):

And the reason that we do that is because we want to make sure that the end business user knows that we respect their data, that's their data, and that we want to be able to provide it to them wherever they need it the most. So, from that perspective, open banking is critical.

John Stuckey (07:46):

I mentioned previously too, the importance of connectivity between banks and ERP and accounting systems. That's one of the most obvious places where open banking data is shared back and forth between those two. And there's even a next step in the evolution of that, which is where we start enabling the ability for our bank's customers to be able to initiate payments on their bank, but from within the accounting platform itself.

John Stuckey (08:16):

So, that becomes the next step of, first it's data sharing, and then it's pushing out functionality that the bank would normally have within its own four walls, its own four virtual walls out to those partners as well.

Jim Marous (08:29):

It's interesting, I've been banking for over 40 years, and I worked in a branch, I worked in business banking, and one of the things that I remember going way back is that we had a lot of really strong small business and even commercial business relationships that also had people running the companies that had even stronger personal relationships or maybe weaker personal relationships.

Jim Marous (08:54):

How do you see in this digital world where there's so much data transferring back and forth, how do you see banks permitting businesses to combine both their retail and business banking relationships into almost a unified perspective? And while it sounds great, and it sounded great 40 years ago, what challenges can arise from this?

John Stuckey (09:19):

It's a critical area to be able to address nowadays. You're absolutely right. One of the things that we've noticed, particularly with smaller businesses again, is you'll have more intermingling of business and personal finances.

John Stuckey (09:33):

And the way that we've attempted to solve that, and we see many banks do the same thing, is we offer a product which is a combination of both consumer and small business that allows the user to go in and toggle back and forth between their personal and business accounts right there from within the same experience.

John Stuckey (09:55):

And a part of that toggling also gives them the personal capabilities that they would normally have in their personal banking, but also then when they toggle over to the small business side, they get a set of business capabilities as well.

John Stuckey (10:09):

Now, these are really tailored more towards small businesses because that's where the intermingling occurs. So, if you have a business that's growing out of that, now they're putting more space between anything that's personal and business from an account perspective, we'll usually migrate them into another platform that's more of a pure play business platform.

Jim Marous (10:27):

Yeah, because you’re running against privacy issues and flow of funds. But it's interesting because the whole digital banking environment makes it so there's so much more opportunity than there ever was in the past from a data perspective, from an insight perspective, even going outside the traditional financial institution.

Jim Marous (10:49):

So, if a consumer has a small business relationship with one financial institution, a personal one with another, when you start talking about open banking, the potential is there to combine them. But it's a matter of saying, “Okay, do you know what you're doing here from the small business side? And are you sure you want all these capabilities, and toggle through and tick off the ones you want?”

Jim Marous (11:11):

But we also talked about a little bit earlier about how FinTechs really play a role, how they're answering individual needs of very unique segments within the small business world. Can you talk a little bit about how the competitive landscape between FinTechs and traditional banking is really impacting the innovation in the, what I'll call legacy business banking space?

John Stuckey (11:36):

Absolutely. I think there's been a big shift there. I would say that historically in the banking space, they have liked to draw a line between themselves and third party FinTech services. So, for example, let's say that we at FIS partnered with a FinTech and wanted to be able to provide that service to a bank, we would usually obscure the FinTech, it would be sold as a white label product, and we would hide that FinTech's name completely.

John Stuckey (12:05):

I would say that there's been a shift now where banks want to be able to present to their businesses and openness and willingness to partner with those FinTechs, because a lot of times, those FinTechs have their own brand name.

John Stuckey (12:18):

So, nowadays, it's not as taboo as it was in the past to, for example, partner with a third party FinTech like an Autobooks for example, who provides digital invoicing and payment acceptance, and allow that Autobooks’ brand name to show up right there when it's offered as a service within the bank as well. So, I think that's a big change.

Jim Marous (12:38):

Well, it's interesting too because organizations are having a hard time innovating at the speed in which their customers, be small business, corporate clients, or even retail clients are wanting things. The consumer now at any level is more aware of what's possible. And I know many times I'll go into my financial institution, they'll hit me with something that sounds so archaic from the perspective of what we're trying to do that it really gets frustrating that organizations can't keep up.

Jim Marous (13:08):

But when you're looking at innovation as speed and scale, the bringing together FinTech solutions with traditional banking solutions, with solutions that you've done in the past really opens up new doors of opportunities that allows us really to innovate at speed and scale in a way we've never done before, and at institutions that are much smaller than we're ever able to do before.

Jim Marous (13:32):

So, it really brings together everything we've always tried to answer, which is, how can I bring the best solutions to the marketplace at a price point, and at the timing that consumers or small businesses really want that.

Jim Marous (13:47):

So, there's no conversation that we have in banking right now that at some point doesn't touch upon AI and machine learning. So, what role do you envision AI and machine learning doing in shaping the future of cash management and of the overall relationships with smaller businesses as well as the larger corporate clients?

John Stuckey (14:10):

Yeah, AI is such an interesting topic, right? Because I think we all know how much promise it holds. In the banking space, it's particularly interesting because it's a regulated space, and so there's more caution that you have to take on certain aspects of it.

John Stuckey (14:27):

Where we've seen AI kind of start to take hold first is more in the bank support space; how do you leverage AI to provide the call center teams with information behind the scenes to be able to better answer a business end user's question.

John Stuckey (14:45):

However, where I'm starting to see that go from there is particularly in insights. So, providing insights to businesses is critical. That's particularly true on small businesses. I think I mentioned earlier, the banks are really looking to find ways to allow small businesses to self-serve themselves.

John Stuckey(15:07):

And that comes along with providing them insights. And those insights might be to help them understand what's going on with their cashflow. It might be using AI to help them understand a little bit more about the way they spend money compared to other benchmark peers in their space.

John Stuckey (15:24):

And so, using AI in that way as a way for us to deliver power to small businesses that makes them feel that their bank is helping them grow without having to have heavy phone one-on-one touch calls with that small business.

John Stuckey (15:41):

So, I think that's what we're going to see is we're going to see AI more as a way to drive insights first into the small business space, and then later, moving up to medium and larger sized businesses as well.

Jim Marous (15:52):

You mentioned regulatory environments with regard to AI, but it really crosses the whole gamut of what we're offering on financial services for consumer, small businesses, and corporate clients.

Jim Marous (16:04):

How are you seeing regulatory environments influencing the development and adoption of digital banking solutions for businesses? And is it more of a constrainer, or as more regulatory decisions come down, has it opened up some opportunities that we may not have thought were there?

John Stuckey (16:26):

The regulatory environment is really interesting to me. I think we've seen a few things there. We've seen kind of this shift back and forth between the importance on deposits versus lending. A couple of years ago when we had a little bit of a crisis with some of the people pulling their money out of the banks, and we had Silicon Valley Bank and others have their struggles.

John Stuckey (16:46):

I think there were then some reactions to that in the regulatory space that now have people focused much more on deposits. Whereas in the past, maybe they were focused more on lending, today, they're focused on deposits.

John Stuckey (16:58):

But we've seen a couple other interesting regulatory spaces. One of the areas that two, three years ago was absolutely at the very top in terms of trends was the ability to use APIs to push banking services outside of the bank.

John Stuckey (17:17):

And so, a lot of people were setting up sponsored bank relationships and enabling FinTechs to create more banking capabilities within their apps. And I think some of that has slowed down because there was some regulatory pushback that they weren't certain they were comfortable that the FinTechs had the appropriate regulatory and compliance items in place for that.

John Stuckey (17:38):

So, I think that's something that's evolving. And then I also think that when it comes to AI, I think we haven't seen the regulatory bodies insert themselves a ton in the AI space. I expect that they will, as soon as banks in FinTechs start presenting more AI that perhaps is making recommendations about people's financial services. I think we'll see them start to actually step in with some regulatory controls there too.

Jim Marous (18:08):

So, John, I often talk to organizations about their mobile banking app, and we've continually tried to improve mobile banking from the consumer standpoint, and it's almost gotten to the point where consumers keep on ranking them very high, but there's not much differentiation.

Jim Marous (18:24):

What trends do you see in how mobile banking is being deployed for small businesses today? And is it everybody trying to get to the same high level that's almost equal, or is there some differentiation going on in the field?

John Stuckey (18:39):

I think one of the great things that's starting to happen in the mobile app space is (this goes back to your personalization question again) how do you personalize the mobile app experience using a combination of dashboard elements, like personalized dashboard widgets that can be positioned and moved around on the mobile app exactly where they want them, as well as services that are more personalized that come up just based on the type of business that's actually using the mobile app at the time.

John Stuckey (19:11):

So, when you get more of that personalization and tailored experience that comes in, now instead of every mobile app from these banks looking the same, at least now they're speaking to the business in their own language right from the beginning.

Jim Marous (19:25):

Yeah, it’s interesting because you referenced the fact that you have so many more services and a lot of transfer. We get excited about being able to make a payment or make transfers between accounts and a consumer side, but in small businesses, to be able to take data and have it deployed against a cash management solution or a payroll solution, or an investment service solution really takes it to a new level in the small business banking space. And it's really opening doors for innovation when you're looking at small businesses.

Jim Marous (19:57):

When you look at market trends going on right now, how do you see the relationship between businesses, FinTechs and financial institutions evolving in terms of digital banking and cashflow management?

John Stuckey (20:13):

Yeah, what I think I see there is I see all of these different players, they all have the same goal in mind, and that goal is to be able to help the business grow. And so, I'm seeing less us versus them mentality, and more of FinTechs and banks and providers like FIS, figuring out how to create ecosystems where we can all work together.

John Stuckey (20:37):

We can all pool our shared data in order to deliver unique experiences to businesses that none of us could do on our own. It's only by that combination of the ecosystem and everyone playing their part where we can actually deliver outsized, almost exponential type of benefit to those businesses.

John Stuckey (20:56):

And I think in general, the financial services space is one where all of those players, banks and FinTechs and technology providers really do try to work together. It's a collegial industry overall, in my opinion. And I think that's to the benefit of the business.

Jim Marous (21:12):

So, you've been at FIS for, as I said, over five years, and so much has happened. I mean, you go back five years ago, oh my God, we're at the beginning of COVID again, and it seems like it's so much longer than that until you look at the speed in which change has happened. And you're really embedded in the product area at FIS as you serve small business clients and things like that.

Jim Marous (21:37):

As you look forward, what excites you about what can happen, what you see possibly happening as banks and credit unions try to serve small businesses and corporate clients better?

John Stuckey (21:49):

I get very excited about the insights side of it. How do we leverage the vast, vast amounts of data that we have to be able to provide actionable insights that help businesses grow? There's such a huge failure rate amongst the very small businesses in the U.S. because entrepreneurs are used to taking risks.

John Stuckey (22:12):

But what I'd like to do, and what excites me is how can we provide better data presented in such a way so that each one of those businesses knows when they have cashflow issues coming up, where I can help them gain access to small business loans or lines of credit before they even realize that they actually need it – where I can connect them via marketplaces to other tools that are in the industry that I have relationships with that help them improve other aspects of their business, from inventory to payroll, to taxes, any of those.

John Stuckey (22:46):

And so, those are the things that excite me, is how can we leverage technology to really help these small businesses be successful, and to grow into medium-size and large businesses.

Jim Marous (22:57):

It's interesting, John, as I said, I've been banking way too long, but as I look at what's out there today, I think one of the things also that is exciting, as you mentioned, taking these personalized solutions, bringing them together. But then feeding them back to the financial institution so that people within that organization can access the data, can access the insights, can access the way the relationship at every small or corporate relationship interacts, so you then can possibly deploy them back to the humans, the client service reps who really specialized in that industry.

Jim Marous (23:36):

The biggest frustration I had is that while I had a branch that was serving me, they didn't understand what my business was. I was a content creator, I was working in the banking industry, I'm creating content on a written basis, on a speaking basis, internationally, on a podcast basis, and nobody kind of understood what I was doing.

Jim Marous (23:57):

But I knew in the back of my mind, somebody within that financial institution on the client services side is working with other clients like me to be able to then to fix the back office so we can democratize the data and the insights so that I can be connected with the right person when I'm having a tax issue or when I'm buying a new business – something like this that it's more transferable in a digital world than it ever was in a human to human basis.

Jim Marous (24:28):

But you can bring these together; the digitally enhanced human experiences or the human-enhanced digital experiences. To your point, I think that's what's really exciting, is being able to take all this data, take this AI, take what the consumer or the small business really expects from their financial institution based on what they're getting from their payroll provider or from other organizations, and be able to deploy that really opens up the door for some really exciting things.

Jim Marous (24:59):

I think you've been in the business at FIS and the small business side during probably the most exciting years, because as you mentioned, at the very beginning of the podcast, this all started from the way we started to handle consumer relationships in a digital way, and we just didn't have the bandwidth to take this on the small business side.

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Jim Marous (25:19):

But then we realized that small businesses are simply consumer people that have a business on the side, almost a side gig or their full-time gig, whatever it is. They want the same capabilities and ease because the one thing we're working toward is how can you save me time? How can you save me money? And how can you like my GPS system, help me avoid those pitfalls in the marketplace ahead of me?

Jim Marous (25:43):

So, John, I really enjoyed your time today, and I appreciate sharing some of the stories and your insights, and also working with FIS as they've continually grown and built an expansive array of solutions that can make banking easier and better for financial institutions.

John Stuckey (26:01):

Thank you. It's been great talking to you today.

Jim Marous (26:04):

Thanks for listening to Banking Transformed, ranked as a top five banking podcast and winner of three international awards for podcast excellence.

Jim Marous (26:12):

If you enjoy what we're doing, please show some love in the form of a review. Finally, be sure to catch my recent articles on The Financial Brand and the research we're doing for the digital banking report.

Jim Marous (26:24):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios, and video producer, Will Pritts. I'm your host, Jim Marous.

Jim Marous (26:35):

Until next time, remember, one of the most dynamic opportunities in financial services is serving the evolving needs of the business banking client.