At this point, talking about how things have changed over the past year (and then some) is trite and cliché, so we’re not going to do that. Instead, we should focus on what is to come in the upcoming months, and the opportunities that lie therein. With the announcement that California will fully reopen on June 15th, it’s likely that will also be the case for most states going into the summer and throughout the rest of the year.
People are going to be coming out to restaurants and retailers (in many cases) for the first time in a long time. Though many businesses have unfortunately had to close over the past year, new ones will have an opportunity to take their place and grow. This provides a huge window of opportunity for banks and their merchant service divisions.
Myriad options abound for new businesses in terms of payment products and merchant processing, many of which are offered by fintechs that can provide sleek interfaces, simple onboarding procedures, and agile data pipelines that allow businesses to leverage their products to do more than just facilitate transactions. As we’ve previously highlighted, this poses a massive challenge to traditional banks that are looking to sell merchant service products to those businesses. The simple fact of the matter is, those banks are operating with infrastructure that they cannot replace, but which does not measure up to the fintechs in terms of providing a seamless customer journey. This scares away newer, young business owners that are just starting out (a concern that Jamie Dimon has also recently emphasized).
Realizing that there is an issue with providing quality experiences to customers as they onboard new technology products is the first step toward working to a solution. Banks have to work with their third party partners, the big processors, to ensure that their merchant clients don’t get lost along the way. They can’t be left alone in the process, left to fend for themselves - because they will, and that will take the form of doing their business with a fintech, instead of a bank. Long-lasting bank-client relationships are not built on neglect. Getting clear on expectations ahead of time, and knowing what a customer will need before they reach a particular stage in that customer journey, will help banks corner more of the merchant service market.
With the present state of affairs, banks can’t compete against the fintechs. They’re bound to lose more and more of the market share as it expands, because entrepreneurs want simplicity, ease of use, ease of support, and most especially - ease of onboarding. Leveraging new technology to revitalize irreplaceable infrastructure is the only way forward, which is why banks would do well to think long and hard about adopting CXM platforms that will give them an advantage over their competitors.