The stage is set for the rock stars of business banking to deliver a new, more profitable future through acquiring.
For too long banks took the back seat while third-parties play to the crowd. Too many banks have referred their valuable flow of merchant acquiring business to processor partners and other third-parties.
It’s a simple revenue model that generates a predictable, if modest income stream, but is that why banks are in business?
Referring merchants to third-parties strikes the wrong note in today’s market amid a race for customer primacy with agile competitors.
Processors and digital-first rivals want to build vertically integrated services, so they can cross-sell other financial relationships to merchants and build closed-loop ecosystems.
Therein, they gain the ability to direct merchants to their own or other financial providers for lending and other core banking services, disintermediating banks altogether.
It’s time to shift the paradigm and put banks back in front of the audience where they belong.
Enter the rock stars of business banking.
This is the growing band of leaders who recognize the potential of merchant acquiring to transform profitability across their business, as they build deeper and stronger relationships with merchants.
They are making their bank the star of the show, not the supporting act, in this changing merchant market, providing small and medium businesses (SMBs) with the services and solutions business owners need and value.
This approach transforms the bank’s profitability, not just for acquiring but across the entire business, as it unlocks cross-selling opportunities, such as lending.
Typically, for every $1 in merchant acquiring revenue delivered by a bank, $4-6 is earned from the provision of additional services.
To succeed, different teams need to work in harmony to deliver the best service to merchants, for example so that merchant onboarding journeys can be orchestrated from anywhere within a bank’s wider customer experiences.
Experience design is key, so that merchants follow a seamless journey between bank services, to retain their business and maximize customer lifetime value.
Departments across the business must be in tune, and identify opportunities where services could be provided by other parts of the bank. Unlocking the power of data and overcoming data silos will deliver this holistic view of the customer and power new services that meet their needs.
To achieve this vision, smart partners will play a valuable role in orchestrating change to coordinate, guide and enable the innovation needed to drive growth, control costs, and bring banks closer to their SMB customers.
Banking’s rock stars can lead the way, providing the vision and ensuring their business achieves its potential, to deliver the best services to merchants, and stronger profits for boardrooms.
Pollinate has produced a guide for banks to outline our key strategic thinking behind a new approach to acquiring.
Donald Chapman, managing director of the USA for Pollinate