JPMorgan Finds Online Banking Doesn’t Meet All Corporate Needs

Use of online banking portals for corporates is ubiquitous — 99 percent of executives recently surveyed by JPMorgan said they conduct business banking online. However, professionals don’t have plans to expand their eBanking habits, and there may be a few reasons why.

JPMorgan’s latest report, Trends in Digital Business Banking, was released Monday (July 9). The analysis of responses from more than 250 business executives found that corporates have embraced eBanking, largely preferring digital portals to conducting banking in person or over the phone. Even as most described themselves as “eager, savvy digital adopters,” for those who don’t fall into that category, more than a quarter said they are willing to learn new tools and technologies.

As financial institutions (FIs) explore new ways to remain competitive and introduce new revenue streams, online banking services are at the top of their list to continue innovating and improving the customer experience. Corporates agree that eBanking services are valuable: They cited the abilities to conduct business from anywhere and gain greater visibility into company finances, as well as the time saved, as the top benefits of online banking. When it comes to which eBanking processes are considered most valuable, payments topped the list, followed by account management and receivables management.

Most survey respondents told JPMorgan that, though they conduct banking online, there are some processes that require in-person or over-the-phone interactions with their banks. But while these avenues are not their first choice when it comes to how they conduct banking, the report found that 45 percent of executives do not have plans to expand online banking use. The analysis suggests there may be a few reasons behind this.

The first reason is the rising worry over cybersecurity. According to the survey, nearly 70 percent of executives said they are extremely or very concerned about the cybersecurity of online banking systems and portals. Management of check fraud and account security were cited by less than 10 percent of survey respondents when asked about the online business banking activities that are most valuable to them.

Apart from cybersecurity concerns, executives told JPMorgan that their continued reliance on cash, paper checks and physical documents are at play when it comes to why they aren’t expanding online banking use. The survey found that 95 percent of respondents said paper checks are the most common payment methodd for their firm, followed by ACH (with 86 percent reporting usage of the tool), wires (83 percent) and cards (74 percent).

JPMorgan noted that the ongoing use of paper checks presents a barrier to eBanking adoption and a challenge to the shift toward digital banking. According to one survey respondent, the decision to continue using paper is not necessarily the company’s choice, but its partners’ preference.

“Our customers and vendors are not fully paperless and still pay with paper check,” the respondent said.

But corporates’ continued reliance on in-person or over-the-phone banking may be a strategic choice. JPMorgan’s report noted that executives agree there are certain circumstances that demand face-to-face interaction with a bank representative. Furthermore, in-person banking is part of corporates’ strategy to develop a stronger relationship with their financial service provider.

“There are certain activities for which we always go online, while there are other activities for which a phone call, email or in-person visit is required,” said one survey respondent.

Another respondent said, “I distinguish business banking into relationship and business strategy, which is different from daily operational activity. Daily activities can increasingly be done online, while relationship and business strategy can’t be done online.”

The survey could be key for financial service providers, like JPMorgan Chase, that have heightened their focus on providing business customers with new digital services. Last month, JPMorgan announced an artificial intelligence-powered virtual assistant for its corporate clients, and said that 40 percent of its $10.8 billion annual technology budget is dedicated to innovating and developing new solutions.

While digital and online services for corporates is clearly in demand, JPMorgan’s report suggests that banks cannot entirely ignore in-person and other non-digital channels through which they interact with corporate clients.