09/12/2018

How Commercial Banks can Stop Leaving Money on the Table

Dave Robertson September 12th, 2018

How much money are commercial banks leaving on the table?

The answer may shock you.

The disconnect between the product and sales teams at most banks can cost a bank more than 50 percent of its potential sales for treasury management products.

Skeptical?

Let’s use Remote Capture as an example. Remote capture penetration varies wildly across banks. Best-in-class banks report 48 percent remote capture penetration.  Conversely, median banks report 25 percent remote capture penetration and those in the bottom 20 percentile have a ten percent remote capture penetration.  Don’t blame differences in target markets. The disparity in the penetration of remote capture is a function of a bank’s inability to translate capabilities into client needs and the magnitude is stark.

Achieving best-in-class remote capture penetration would enable median performers to double their revenues from remote capture, while performers in the bottom 20 percentile would reap five times the remote capture revenues.

So, how can your commercial bank stop leaving money on the table?

Increasingly, growth is about creating value outside the payment, including capturing invoice, customer and other key information for purposes of automating cash application, improving customer billing experience and accelerating the financial supply chain.

The biggest thing that sets banks with the money apart is their go to market capabilities. Go to market capabilities is the disciplined delivery of bank capabilities to client needs:

  • Identify and prioritize prospects
  • Uncover client needs
  • Design optimal solutions
  • Quantify and articulate benefits
  • Mitigate concerns about change

Banks identify and prioritize prospects without examining the attributes that make a good prospect, the client’s needs, how well the bank’s capabilities fit the client’s needs, the bank’s ability to articulate and deliver value, and how the bank can mitigate client concerns about change.

By focusing on uncovering opportunities to create value, banks can not only improve the prioritization of opportunities, but can also qualify what might be interesting ideas to bring to the prospect.  For instance, supplementing an estimation of economic value with Key Performance Indicators (KPI) and best practices could further improve a bank’s ability to deliver an advisory sale and create value for the customer and the bank.

And there is the rub – while everyone wants to deliver a value-creating, advisory sale, delivering this experience is not easy.  Banks must become proficient in:

  • Client processes, decisions and data architecture
  • Client economics
  • Best practices, KPIs and improvement hypotheses
  • Customer propensity to buy, switch or augment
  • Economic benefit modeling
  • Consultative selling
  • Diagnostic sales tools
  • Change management

To understand the scope of the challenge for banks, consider the working capital cycle, which is complex and affects customer relationships, revenues, profitability, and the corporate balance sheet. The order-to-cash cycle encompasses functions such credit management, order and customer management, billing, payment acceptance, cash application, clearing, deductions and disputes, collections, and receivables funding, while impacting cash concentration, forecasting and planning, bank and/or counterparty management, and cash deployment.

The buyer procure-to-pay process – purchasing, invoice processing and disbursements – also plays a big role in the order-to-cash cycle. Complicating matters, corporate needs and opportunities vary by industry group, customer technology environment, and customer attitudes and preferences. Businesses are driving more discipline around collecting receivables. But orchestrating the right expertise to help corporations is a tall order for most banks. Banks need help selling their treasury management services.

They want to know which industries in their target market or geographic footprint that they should focus on to grow deposits. It is for this reason that Deluxe Treasury Management Solutions augmented its technology with go-to-market capabilities. Our current go-to-market capabilities for commercial banks include:

  • Prioritized lead lists and an accompanying value proposition
  • Market scans of industry verticals with revenue pools, profit pools and key order-to-cash pain points and needs
  • The value proposition for order-to-cash solutions by segment
  • Pitch decks to generate prospect interest
  • Diagnostic sales tools to uncover, qualify and quantify benefits of opportunities
  • Proposal templates to sell solutions, articulate benefits, and outline migration plan
  • Rosters of common obstacles to adoption and mitigating responses

These are the things we know are associated with creating an impetus for corporate clients to act. The objective of these go to market capabilities is not to convince banks to change their sales model. The goal is to accelerate the sales process to help ease the pressure of hitting revenue targets quarter-over-quarter and year-over-year.

Does your commercial bank want to cash in on the massive growth potential in its existing customer bases and target markets? Deluxe Treasury Management Solutions can help with go-to-market capabilities that tightly align product management and sales, while augmenting the skills, insights and activities of a bank’s sales force.

This content is accurate at the time of publication and may not be updated.