Study finds banks using fewer services and cloud software than other industries
ForwardAI – a fintech providing aggregated access to accounting and business data and analysis – has released a whitepaper showing shortcomings among banking and financial service providers in their offerings to commercial clients.
The fintech noted consumers have started to enjoy better financial services from accelerated digitization. But the report finds that commercial customers are starting to expect the same full-suite of “anytime-anywhere” services from their financial institutions. Despite the growing demand, more than half of surveyed companies provide neither funding advisory nor cash flow forecasting services.
In this realm, financial firms need to catch up, the report finds. While bookkeepers, accountants and accounting firms are ahead of the curve – with more than 75% of respondents offering funding advisory services to their clients – only 49% of bankers, financial planning and financial service providers offered such services, the whitepaper found.
And while cash flow forecasting is crucial, only 34% of respondents in banking and financial planning offered such services as outlined in the report.
US firms had one advantage over their Canadian counterparts, according to the whitepaper. While more Canadian companies provide funding advisory, fewer provide cash flow services or utilize cloud-based accounting software compared to the US across all industries, the study found. The US has a significantly higher cloud-based accounting software utilization rate of 55% compared to Canada’s 44%, analysts found.
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“Offering cash flow forecasting, funding advisory services and promoting cloud-accounting software not only enhances a small business’s financial health and accounting efficiency but opens the door for companies to offer their clients personalized solutions to make their businesses more competitive while meeting customer demands,” Nick Chandi, CEO and co-founder of ForwardAI noted.
In the survey, ForwardAI looked at firms interested in providing funding advisories or cash-flow forecasting services for their clients – both considered crucial elements for business success. Analysts found that more than half (52.3% of respondents) were providing these services. Moreover, only about one in five firms (18.8%) provide both funding advisory and cash flow forecasting services.
“That might sound daunting, but the good news is while the majority of the firms are ‘laggers’ who have yet to adapt to provide full-suite services, the ‘innovators’ are starting to pick up the trend and provide as much value they can for their clients,” the report reads.
Analysts posited a premise in the report: If a company provides funding advisory, it is more than likely to provide cash flow forecasts to their clients. While the trend is prominent among accountants, with three in four indicating they offer both services. In contrast, only half of respondents from the bankers, financial planning and financial services industries said they offered both.
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Diving a little deeper into rates of adoption of cloud-based technology, the report found that cloud accounting software utilization varied significantly among industries. Particularly notable was the finding that only 37.8% use cloud-based accounting software that is rapidly replacing on-site or local accounting software. One key benefit of such utilization is its ability to be used in conjunction with other services or software that can add value for a client, such as cash flow forecasting tools.
The fact that such a low percentage of bankers are utilizing cloud-based accounting software may suggest that banking or financial services providers are only providing the bare minimum services to their clients, analysts surmised in the whitepaper.
“For financial service providers that haven’t transitioned into using newer technology, cloud accounting software can greatly increase a firm’s efficiency, including automated accounting processes, less administration required, real-time accessibility to accurate information and much more,” analysts wrote. “Furthermore, cloud-accounting software enables service providers to integrate with modern tools to quickly provide additional services such as funding advisory and cash flow forecasting with minimal effort.”
To create the report, ForwardAI surveyed multiple industries across the US and Canada to analyze the current state of each sector, including financial services providers. Participants were asked three questions about their business practices, as well as filling in demographic and geographic information.
