Alaska Business Banking Trends
Addressing customer needs and preferences
The Denali Business Center.
Courtesy of Denali FCU
Recently, Denali Federal Credit Union began offering customers a special perk: the Denali Business Center. Business members can use the Midtown Anchorage facility to host meetings, conferences, and other events in a professional setting. They can take advantage of the center’s private offices, small meeting rooms, state-of-the-art video conferencing, and copy and fax equipment. There’s also a resident concierge available to help with everything from room reservations to refreshments.
The Denali Business Center is a valuable and much-needed resource in the community, particularly for small business owners, says Tara Tetzlaff, senior vice president, Business Lending And Services. The center is also a positive selling point for the Credit Union. “It is an excellent way to differentiate ourselves from the competition and to serve business owners who don’t have the resources,” Tetzlaff says. “It’s high-tech, and they like it.”
Denali’s business customers can use the center’s amenities for $25 per day or $300 per year. However, the credit union may be able to waive the annual fee for certain members. “It depends on the relationship,” Tetzlaff says.
The Denali Business Center is an example of how Alaska’s financial institutions are enhancing their products and services to meet the needs of business customers. Other business banking trends in Alaska range from increased interest in offerings from credit unions to a greater demand for technology, fraud protection, time-saving services, and small business solutions.
Credit Unions Catering to More Businesses
Today, credit unions are more focused on offering business banking services than they have been in the past, according to the National Credit Union Administration. Credit unions have found a niche supporting small businesses that may be neglected by other, larger institutions, Tetzlaff says. This is enabling them to expand their membership and better serve their existing customers. “For years, our consumer members who also owned businesses have requested services,” she says. “By developing products to serve the needs of these members, we can provide the personal service and individualized products that retain their personal and business relationships.”
More business owners are looking toward credit unions to fulfill their commercial banking needs, Tetzlaff says. And Denali FCU is striving to meet their expectations. For instance, the credit union offers automated clearing house (ACH) service that enables customers to pay bills, withdraw payments, and direct deposit payroll conveniently online. They can also use remote deposit capture to deposit up to 150 check items in one scan without leaving their office, paying a courier service, or mailing the items.
Beyond its deposit products, Denali offers an array of business lending products to meet customers’ needs. Recently, the credit union began issuing business Visa cards that offer the ability to establish cardholder limits and even control what items can be purchased.
In its efforts to cater to businesses, Denali allows business members to establish accounts according to their preference. Members can set up sub accounts as well as establish multiple accounts with unique numbers for different purposes. “Denali is flexible and can support a variety of needs,” Tetzlaff says. “Our Business Financial Services team will take time to get to know our members and offer the mix of products that best fits their business operations.”
The increased presence of credit unions in commercial banking is a positive trend for the business community, according to Dave Hamilton, executive director of Business and Commercial Services at Alaska USA Federal Credit Union. Alaska USA—which has offered business loans since 2004—has steadily been increasing its offerings for business members. “Business owners are used to competing for their share of the market they work in, so they appreciate having more financial institutions competing for their business,” Hamilton says. “We’ve heard from long-time members and new members alike that they appreciate being able to conduct their business services at the same place they manage their personal finances.”
Hamilton says business owners are looking for ways to streamline their banking services through automation to reduce the administrative time. That’s why Alaska USA is excited to offer remote deposit to business members. The service allows business checks to be deposited via a smart phone app, letting users avoid making deposits in person. Alaska USA also offers a variety of online financial management tools that can help business owners have more time to concentrate on their business revenue activities.
Key Trends Involving Technology
Many of Alaska’s business banking trends are being driven by the use of technology. Because of technology, businesses expect customized banking services, according to KeyBank Vice President and Commercial Banking Relationship Manager Phil Reid. “It’s no longer the one-size-fits-all type of environment,” says Anchorage-based Reid.
For example, if a business wants to require triple authority for approving a transaction, modern technology makes this possible. The older banking systems only allowed for dual authority. “But now software is adaptable to meet whatever standards the company wants to have,” Reid says.
KeyBank’s recent partnership with Charlotte-based AvidXchange is one example of how software is being adapted to the needs of users. The bank hired AvidXchange to customize its cutting-edge software for its accounts payable system. The software takes paper-based invoices and seamlessly converts them to a digital format. “It speeds up processing time,” Reid says. “It allows office staff to spend time on other projects like growing their business.”
Business banking customers are also using mobile technology to facilitate banking activities. They’re using mobile devices to do everything from approve ACH and account transactions to monitor their accounts for fraud when they are away from the office.
Reid says he feels that technology has become a great equalizer. And in Alaska, it’s a real game changer. Technology is allowing businesses in Alaska to function like other companies in any other part of the country. “It’s very gratifying that we have the same services as anyone else,” he says.
There’s a demand for better and better business banking products in the state, and KeyBank is striving to satisfy those needs, Reid says. “Keybank is constantly working on research and development to provide clients what they want,” he adds.
At Wells Fargo, technology is quietly transforming customer interactions. Customers are less likely to walk in the door to do transactional business, says Wells Fargo Alaska Small Business Segment Manager Andrew Foust. When customers do visit a bank, it’s typically to speak with someone about a complex issue. Still, technology can have the underlying effect of facilitating conversations. “When there is a need—if we’re doing our job and engaging customers proactively—technology helps us do our jobs better,” Foust says.
Even though many customers may use technology to become well versed on banking options, having a face-to-face relationship is still crucial, Foust says. However, using technology to explore options can speed up and enhance the decision making process for customers. “It almost makes the customer feel better about their decision if they’re already done their research,” Foust says.
Today, millennials make up a growing segment of business owners, and technology is a staple tool for these younger business customers. They tend to want to have their bank in their pocket, Foust says. “Contrary to popular believe, millennials do want a banking relationship, but they want it when they want it,” he says.
To satisfy customer demand, Wells Fargo is seamlessly integrating all the delivery channels that customers are using, Foust says. For example, it’s using technology to provide options like smartphone alerts and notifications to help customers stay on top of their account information.
Mobile banking is also becoming more prevalent in business banking. In fact, more than 51 percent of business owners said they use a mobile device to conduct banking related to their business, according to Wells Fargo’s latest quarterly Gallup Small Business Index on technology and payment trends. The mobile banking activities that respondents use most often on their smartphone or tablet were staying on top of cash flow for their business (38 percent), mobile deposits (21 percent), paying bills (13 percent), transferring funds (12 percent), and monitoring for out-of-pattern transactions or fraud (12 percent).
Like Wells Fargo, Northrim Bank is focusing on making it easier for business customers to access their account with mobile devices, according to Senior Vice President and Electronic Channel Delivery Manager Katie Bates. In the past, businesses were driven by desktop computer, but now mobile devices are the norm. “They’re used to utilizing their devices for other things, so they also want to use them for banking,” Bates says.
Consequently, Northrim is carefully considering how to present its service offerings to best fit customers’ habits. The bank is exploring how to better optimize its website to enhance the customers’ online and mobile banking experience.
Thanks to technology, electronic delivery is a dominant trend in business banking. In the past, Bates says, business owners wanted to perform their banking from 8 to 5, and now that business products are being offered electronically, this has changed. “It’s forcing us to make our products and services available when customers want them,” she says.
Taka Tsukada of First National Bank Alaska is seeing a consistent shift away from paper to electronic and mobile banking. That makes sense, given the convenience of online banking and Alaska’s vast geographical size, says Tsukada, vice president, Cash Management and Anchorage Branch Administration manager.
First National is excited about launching an upgrade of its existing online banking system, ONEPay. The revamped system is a next-generation payment tool that gives business customers the convenience of handling ACH and wire transactions in a more intuitive manner, Tsukada says. “In working with our customers, one of the key trends we’re seeing is that not only are customers looking for efficiencies with processes and transactions, but they want to have an intuitive interface in order to do that,” Tsukada says.
First National is also responding to customers’ request for future-dated wires or transactions. Now customers have the ability to input transactions forty-five days in advance. “It allows them to bank when they want to bank, instead of always having to input a transaction in a shorter amount of time,” Tsukada says.
Fraud Protection and Security
One of the key areas trending in business banking is customers’ concerns related to fraudulent transactions. Through its ONEPay product, First National has included additional enhancements related to security. For example, customers are asked to provide identification when signing in and approving transactions. “This gives the customer peace of mind,” Tsukada says.
To help customers streamline processes, ONEPay automates notices for fund transfers, payments, and other transactions. So instead of having to go look for this type of information, customers receive statuses by email. Tsukada says, “It’s really about improving the user experience.”
Tsukada says fraud has always existed, but now it’s become more well-documented. More and more, customers are becoming aware of the need to take steps to try to mitigate fraud. And they are interested in services that will help them protect themselves.
First National’s Positive Pay cash management option can help address this concern. Positive Pay is a relatively simple tool that effectively thwarts fraud. “The customers provide us with the equivalent to their check book register, and we compared their file to what is trying to clear the bank,” Tsukada explains. “If a check or an amount doesn’t match, we would be able to identify that and let them know.”
As the technology changes to offer better protection against fraud, companies have to change how they view their current business model and practices, Foust says. Indeed, practices are changing. Some businesses are adding extra purchasing protection on their commercial credit cards with MasterCard SecureCode and Verified by Visa from Wells Fargo. Once they enroll in MasterCard SecureCode or Verified by Visa, customers have a single password to use when they make purchases at participating online stores.
As credit card fraud becomes harder to commit, criminals look for other ways to attack, Foust says. “We’re starting to see interest in businesses wanting to protect themselves from check fraud or ACH fraud,” he says.
As a result, businesses are turning to services like Wells Fargo’s ACH Fraud Filter and Perfect Receivables. ACH Fraud Filter uses a two-pronged “stop” and “review” approach to prevent fraud. The free service automatically stops all ACH debits that are not preauthorized from posting to the customer’s account. Then it presents transactions for review, so the customer can make pay or return decisions.
Wells Fargo’s Perfect Receivables service provides “proxy” account numbers for customers to use when submitting ACH and wire payments. This minimizes the risk that the business owner’s account will fall into the wrong hands.
Business owners like the fact that they can manage their business accounts through electronic channels, Hamilton says. However, there is always concern about security when using these channels. That’s why Alaska USA continues to implement security features within its online systems to help prevent fraud. For example, businesses can establish limits and authorize personnel to conduct transactions in a safe and secure manner. “We see more and more business owners becoming comfortable with these features, and it allows them the ability to approve all transactions before being processed,” says Hamilton.
Addressing security concerns is also paramount at Denali FCU. The credit union’s online platform not only offers a robust and positive experience for users, but it also includes a variety of security features like Touch ID, according to Tetzlaff. Customers with Apple devices can use Touch ID to access their account with just their fingerprint.
Reid says businesses are looking for banks to provide ways to minimize the danger of internal and external fraud. To minimize risk, KeyBank spends a great deal of time and resources strengthening the security of its online banking software. The bank also offers webinars to educate customers on how to best protect themselves from fraud.
Small Businesses Trends
Alaska’s financial institutions are also launching new products and services to address the needs of small businesses. Northrim, for instance, is in the process of releasing a new bill pay product that will allow business customers to pay bills and have invoice capabilities. “It’s taking a look at our business customers’ needs and recognizing that our smaller customers may not want ACH,” Bates says. “They may be more inclined to use bill pay.”
The bill pay product, aptly named Business Bill Pay, is the result of customer interest and feedback. It should be fully implemented by the end of July.
Bates says it’s important that small businesses are using product offerings that best meet their needs. Consequently, Northrim is initiating courses to help businesses learn more about their banking services. “We want to make sure that when our customers sign up for electronic services, they know how to access the resources,” she says. “They also need to know what’s available, why it’s available, and how they can utilize it to their full potential.”
In addition, Northrim wants its customers to have best practices, so they can learn from others and improve their efficiency. Take ACH service, for example. A customer using ACH for direct deposit might be able to capitalize on automation to avoid typing in the dollar amounts. “If their software can generate an ACH file, they can save all that time from manually keying by utilizing something that’s already available,” Bates says.
Small businesses that need financing may be able to take advantage of the Small Business Advantage Line of Credit from Wells Fargo. The Small Business Advantage Line of Credit is a revolving line of credit for $5,000 to $50,000 with a five-year term. Backed by the Small Business Administration, the line is completely unsecured, and no collateral is required. “It’s something that’s new and exciting for us,” Foust says. “It’s underwritten largely under their personal credit.”
The Small Business Advantage Line of Credit allows Wells Fargo to provide a Small Business Administration product at a much faster speed to market. “We’ve got it [processing] down to 17.5 days,” Foust says. “Customers who have their documentation in order can expect an even faster turnaround.”
But perhaps the most exciting aspect of the new credit line is this: Wells Fargo can offer it to new customers. The zero-to-three-year mark has historically been a challenging time for new businesses that are applying for credit, Foust says. Wells Fargo’s product can make it easier for them to secure financing. “Even though it’s a small line, it’s establishing a history,” he says. “It’s something for new businesses—not just a credit card.”
Freelance writer Tracy Barbour is a former Alaskan.
This article first appeared in the July 2016 print edition of Alaska Business Monthly.