The mashup of transactional digital banking and digital sales is well under way in the market, as is evidenced by the recent announcement by Q2 of its intent to acquire Cloud Lending Solutions.
As branch transactions decline, bank and credit union executives are pushing harder to show explicit revenue and lead generation through their digital channel investments and get beyond the nebulous experience and brand chatter. Sales and marketing functionality are among the features ranked the hottest in Cornerstone’s digital and origination system selection engagements.
This deal is reminiscent of Bottomline’s acquisition of Andera a few years ago. Most transactional digital providers like Q2 have been developing or partnering for origination solutions. What’s a little more interesting here is Cloud Lending’s offerings address commercial as well as consumer.
While midsize banks have been steadily growing their commercial lending specialization for years, rising competitive pressures and focused strategic plans have commercial banks pushing for more funding from their commercial clients. According to Cornerstone research, commercial mobile and origination systems are among the hottest applications being replaced right now. Q2 has benefited from these trends with a recently developed commercial digital offering.
Another benefit of the Q2/Cloud Lending deal is that while most banks usually have decentralized revenue gathering organizations, the chief lending officer is the closest thing many FIs have to a revenue/sales/growth leader. Many CLOs have been handed deposit/funding leadership (or put on the hook for it, depending on how you look at it), and we don’t see a lot of them asking for permission from CIOs for much of anything. So a commercial lending/cash management digital mashup like this can speak directly to power.
We don’t anticipate any near-term impact to clients of either company. With Q2’s online banking and cash management and Cloud Lending’s consumer, small business and commercial origination, a strong case could be made (and undoubtedly will be, loudly) for some banks to tackle lending and the growing funding challenge with an integrated suite from one provider. We don’t expect Q2 clients to throw out their existing origination providers or Cloud Lending origination clients to throw out their transactional providers. But bankers should keep an eye on this deal as an opportunity to provide “full digital” functionality that demonstrates sales-to-service-to-more-sales in banking.