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What does customer experience have to do with treasury management?

Financial Institution: Streamline Operations

customer experience and treasury management

Treasury management is undergoing a sweeping transformation from back-office support to a leading revenue driver for financial institutions. Customer experience is a critical cog in treasury evolution, and one that cannot be ignored if banks are to compete with Fintech. Here’s why customer experience is important to today’s treasury management departments and how banks can overcome challenges to deliver a first-class customer experience that fosters long-term and prosperous relationships.

Customer experience is everything

Meeting treasury customer needs is critical to strong, long-term and profitable relationships. As treasury management evolves from a support function to a front-line sales engine, leadership must adopt a customer-first mindset if they are to compete with Fintechs and maintain relevance in the Digital Age. Treasury management must provide value for customers in order to provide value for banks via revenue growth spurred by increased deposit volume and fee-based income.

It’s easier said than done, as treasury management faces significant obstacles to delivering a desirable customer experience. While the need for enhanced customer service is not lost on the treasury leaders Deluxe interviewed for a recent white paper, many face a difficult predicament: How to keep up with the pace of technology and the rising customer expectations that accompany it?

Three factors emerged from Deluxe’s interviews:

Consumer expectations are bleeding into corporate life, upending the status quo for digital user experience

  • The complex relationships that treasury holds with commercial customers, combined with a shortage of resources, make it difficult for treasury to focus exclusively on innovation
  • Both Fintechs and core processors create challenges for treasury when it comes to launching new solutions and enhancing current platforms

Rising customer expectations

Better technology has been disrupting consumer experiences for years. Individuals today live in the era of “now,” and so do businesses. Apple, Amazon and Instagram have today’s treasury management end users expecting an intuitive and easy digital experience.

In many cases, CFOs and corporate treasurers are newer and younger customers. This demographic shift is a catalyst for change, as younger generations expect instant service and streamlined, intuitive user interfaces.

Unfortunately, many treasury solutions fail to deliver. Most treasury management interfaces provide a less than ideal user experience, in large part due to resource limitations but also due to poor prioritization. Many treasury leaders expend valuable time on vendor selection and integration processes rather than product development and customer experience.

Complex relationships

Customer onboarding and ongoing relationship management also bring challenges. Reading between the lines when talking with interview participants, treasury is under pressure to provide existing customers with excellent and responsive service, regardless of whether it is digital or human assistance.

Especially at smaller financial institutions, treasury management leaders commonly perform onboarding, set up and service tasks to meet customer needs.

While some traditional customers might appreciate the hands-on approach, contemporary customers can deem things like paper onboarding and the need for in-office meetings as time-consuming and wasteful.

Treasury management is tasked with serving both customer mindsets, which presents additional complications: talent woes can make it difficult to provide the personalized experience some customers expect, while technology limitations can hamper a bank’s ability to deliver integrated solutions others demand.

Fintechs gain traction by unbundling traditional treasury services

Fintechs are also raising the bar for customer experience, and in the process, threatening financial institutions’ abilities to maintain complete control over their customers’ cash and treasury management relationships. FIs interviewed see these new competitors disrupting traditional business models, innovating in specific product areas and cherry-picking the most profitable parts of the cash management system – and in many cases, doing it better.

Not surprisingly, Fintechs arose as the number one external challenge for treasury leaders, cited by the majority of FIs interviewed. Yet the relationship is complicated: FIs must consider Fintechs as trusted partners as well as competitors, since Fintechs can provide technology many banks do not have the resources to develop on their own. Smaller FIs, in particular, are likely to work with Fintechs in order to achieve their technology goals.

Most FIs simply can’t compete with the customer experience delivered by Fintech; at least, not without partnering with Fintech companies. That’s especially true when Fintech has an accelerated time to market, while FIs are commonly “held hostage” to the schedules and product development capabilities of their outside core processor vendors. In addition, Fintechs are attracting top talent that once flocked to treasury management, leaving a staffing void that’s difficult to overcome without an internal cultural shift.

8 ways to improve the treasury management customer experience

Customer service must take top priority if treasury management is to pioneer value-added revenue growth. Though the obstacles are significant, each can be overcome with an innovative approach to treasury transformation.

1. Fully understand the desired customer experience

FIs must seek to understand the desired customer experience if they are to compete with Fintechs and attract and retain long-term customer relationships. Banks can study successful Fintechs to identify what they do well and what their customers like about them. They can also interview their existing and prospective customers to identify their desired experiences.

For example, interviews might reveal that customers find the onboarding process cumbersome and would prefer paperless onboarding. Or, a given FI might find that its customers want consolidated offerings, remote deposit capture or integrated receivables. The better banks understand customer expectations, the better positioned they are to deliver an experience customers love.

2. Create a technology roadmap

Armed with the results of customer interviews, financial institutions can create technology roadmaps that ultimately lead to a streamlined, integrated customer experience. Treasury management should establish a dedicated product development group whose sole focus is on developing products that meet and exceed customer expectations.

A good technology roadmap also outlines a strategy to compete with Fintechs, including an accelerated time to market. Many leaders to not believe they have the capabilities or the resources to innovate or go to market as fast as Fintechs. Internal processes, including compliance and legal hurdles, are common factors that slow time to market; while most Fintechs operate with far less regulatory oversight. A potential solution, then, is to scrap current core processor vendors and partner with Fintechs to develop and deliver technology enhancements.

3. Prioritize investments

As mentioned, a common problem FIs face is dependence on current vendor capabilities and development schedules. That inhibits innovation, slows time to market and ultimately makes it difficult or impossible to compete with Fintechs.

Even though banks recognize a change is needed, many leaders unfortunately focus on vendor selection and integration processes rather than product development and customer experience. That might be considered a wasted investment, especially if current vendors – many of which are nearly indistinguishable from the next – simply can’t provide the technology needed to meet customer demands.

FIs would be wise to prioritize investments in activities that can truly enhance the customer experience: understanding customer needs and demands, then developing products and partnering with technology providers who can deliver them.

4. Hire, train and retain top talent

Today’s treasury departments struggle to attract the brightest young minds, in part due to competition from Fintechs, which offer cool start-up culture and the perceived ability for staff to make an immediate impact with their work. That’s only part of the problem, though: many banks do not have a succession strategy to pass knowledge from leadership to younger employees, so top talent does not recognize a clear path to career advancement within treasury management.

It should go without saying that results are less than desirable if banks are forced to match priority customers with second-rate staff. Thus, financial institutions should innovate internal cultural changes that create an engaging workplace where top talent can thrive. Mentorship programs, participation in product development and career opportunities as well as the ability to do meaningful, fulfilling work can help banks attract the talent needed to deliver an exceptional customer experience.

5. Cultivate an innovative internal culture

As mentioned, it’s tough to attract top talent when banks are perceived as stodgy, 9 to 5 office jobs. A shift in internal culture that not only engages employees but also celebrates individual and departmental wins is key to improving the customer experience.

Office environment and working conditions – and the attitudes they influence – permeate the entire organization. When employees are happy and confident, their attitudes reflect on their work. It’s what customers will see; thus, cultivating an outstanding internal culture will breed success on the customer experience front.

6. Document all aspects of the customer experience

Financial institutions of all sizes have the capability to document all aspects of the end-to-end client experience, from onboarding to back-office servicing.

This type of documentation helps treasury management view the big picture as well as identify small enhancements that can yield enormous gains in customer experience.

For example, documentation might reveal that a bank loses a significant number of customers around tax time. Upon further exploration, the bank might discover customers find its practice of mailing investment-related tax documents cumbersome. A shift to digital delivery might not only retain accounts, but also attract new customers.

Documentation also plays a major role in resource allocation, covered below.

7. Elevate treasury management’s role and secure resources

Ample resources must be dedicated to treasury management if it is to innovate and implement solutions that enhance the customer experience. To secure said resources, treasury management leadership must work to elevate its role within the financial institutions. That means proving treasury’s value as a sales engine.

To prove its value, treasury management can show executive leadership documented successes based on key performance indicators. Illustrating how treasury management can increase deposit volume and fee-based income – and ultimately increase profits – is a powerful way to get a seat at the table for strategic organizational decision-making. That, in turn, helps secure buy-in from executive leadership and justify the resources needed to deliver a customer experience that yields even greater profitability.

8. Adopt a Fintech/consumer marketing mindset

There’s no doubt treasury management can be a powerful sales engine for FIs, but to do so it must become a highly visible department independent of other services. Where customers were once initially introduced to treasury management on the back end of the commercial lending process, it now must be aggressively marketed as a front-line service. Indeed, treasury management might now be the one making the introductions to other internal departments.

Banks can study how Fintechs deliver a consumer-oriented experience to commercial customers and how they communicate their value propositions. Treasury management, then, can adopt a similar approach to marketing – and also promote the advantages banks offer over Fintech: decades of experience, marketplace stability and whole-account servicing, for example.

If treasury management is to survive Fintech competition – and even thrive in the era of “now” – it must recognize that customer experience is everything. Then, it must prioritize investments and advocate for the necessary resources to complete its transformation from a back-office support function to a leading sales engine.

Every FI’s innovation roadmap will be unique, but every treasury management roadmap should prioritize customer experience. In doing so, treasury management can foster valuable, long-term and loyal customer relationships.

The information provided in this blog does not, and is not intended to, constitute legal or financial advice.

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