The three biggest opportunities for banks right now

In a post-pandemic climate rife with competition and heightened customer expectations, how can incumbent banks compete with new-age fintechs? 

Customer expectations have shifted. Both consumers and SMEs want the best financial products, regardless of who provides them. 81% of consumers claim they would be motivated to switch to a new-age financial provider that offered more flexible solutions and easy access and a report by Accenture found that fintech adoption among SMEs could surge as high as 64%.

Increasingly, challenger banks and fintechs are building a myriad of digital tools and integrations to add additional value to their core offering and win on customer satisfaction. If incumbent banks can compete on user experience and how well they can tailor products to their clients, then businesses will continue to favor recognizable brands for their reliability and the low cost of borrowing. After all, a recent survey found that UK respondents in particular remained wary of neobanks.

Incumbent banks need to rival new-age fintech competitors on digitization, interoperability between systems, and hyper-personalization. This article outlines some of the ways they can leverage data, connectivity, and technology to capitalize on these key opportunities and ensure long-term customer retention. 


The pandemic forced banks to move the primary delivery mechanism for products online as customers were no longer willing nor able to visit physical branches. In the UK, this resulted in a surge in open banking with over 2.5 million people now using open banking to move and manage their finances. Open banking is proving so popular that 71% of SMEs are expected to be utilizing it by 2022.  However, 46% of bank executives “say they are unsure how to embrace open banking, orchestrate ecosystems, and become a truly data-driven organization”.

The willingness of SMEs to embrace digital data sharing presents an opportunity for incumbent banks to automate other outdated processes, such as manual document collection for underwriting and ongoing covenant monitoring, reducing costs and making faster and smarter lending decisions as a result.

For example, Codat clients have replaced the time-consuming collection, re-keying, and spreading of financial statements with the automated processing of data from the financial systems used by businesses every day, such as Xero or Sage, directly into the bank’s spreading tool. This ultimately saves time, lowers costs, and eliminates human errors, while improving the borrower experience at the same time.

Codat also helps to reduce default risk by replacing the monthly or quarterly collection of financial statements with an up-to-the-minute detailed view of your customers’ finances on an ongoing basis. SMEs benefit, in turn, from faster decisioning times and more bespoke products. Customers may also benefit from more favorable rates due to the bank’s enhanced ability to calculate risk and the notable reduction in the cost of serving these businesses.


The increased appetite for interoperability on the part of the small business has opened the door to a much more collaborative, bespoke, and diverse service between SMEs and their banks. On average, SMEs now use over 40 different applications to manage their businesses. It is crucial that these applications work together seamlessly, therefore, incumbent banks have a duty to ensure they are fully integrated with all the systems used by their customers and the full breadth of data sources available.

With access to more data, the potential to easily create new products is an exciting possibility. Incumbent banks can utilize financial integrations to add additional value to their core products by offering a wide range of solutions such as business financial management or cash flow forecasting tools.  By up-selling access to them, banks can create additional revenue streams or offer them for free to develop valuable customer relationships.

Previously, banks have relied on their busy bank managers and their long-standing relationships to hold off their digital competition, however, it is apparent that this strategy is changing. We are moving towards times of greater innovation within the SME banking space.


Access to real-time data from multiple sources is the only way to truly understand and respond to the changing financial needs of a business. With greater insight, incumbents can offer bespoke solutions to their customers based on their current financial position. Relationship Managers can spot both good and bad performance indicators sooner and recommend bespoke products and services based on this knowledge. By shifting from a reactive to a proactive approach, banks can vastly improve the standard of service they are able to offer, changing their relationship with customers for the better and ultimately securing greater retention rates.

Why now?

The pandemic has ushered in a new era in business banking and traditional providers will need to adapt their offerings in order to remain competitive. Incumbent banks have the opportunity to capitalize on this industry-wide shift by investing in tools that facilitate digitization, interoperability between systems, and hyper-personalization. Doing so will not only ensure they retain customers, it will also save time, lower costs, and minimize bad debt. 

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George Webb