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Bridging the gap: small businesses and financial institutions

Bridging the gap: small businesses and financial institutions

09/06/2023
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In a recent episode of the Bankadelic podcast with Lou Carlozo, Lindsay Hodges discussed the gap between FIs and their SMB customers and how this relationship can be strengthened through a partnership with BankiFi.

We dive into the causations of the space between FIs and SMBs in this blog, as well as how partnering with BankiFi can help to bridge this gap. 

The impact of digitization on banks and SMBs 

Looking back 20-30 years, we can really see a difference in how banks and their small to medium-sized business (SMB) customers used to work with each other. I can remember back in the 90’s when I was working as a bank teller, there used to be a community of SMB/gig owners that would come into the bank, and we would have those face-to-face interactions – a tell-tale sign of a deep and trusting relationship between one another. Moving into the digital era in the 2010’s with ACH, wire transfer, remote deposits etc that started to emerge, this changed the FI-to-SMB relationship for the foreseeable future. 

This digitization was necessary and its value to the SMB was, and still is, clear. SMBs can self-serve since they are able to manage their financials on the go, for instance. For banks and FIs, this technological revolution meant that business’s deposits landed into the bank easier, without them having to venture into the bank. This, however, was the start of banks losing touch with their SMBs, because that previously necessary face-to-face interaction had started to disappear.  

With the gap between SMBs and banks continuing to widen, both parties can’t get as much out of the relationship as a result.  

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The gaps between banks and SMBs 

This distance has led to banks struggling to find what solutions SMBs actually need to grow and thrive. Knowledge and understanding of the gig worker, sole trader and smaller SMBs is the first step to bridging this gap.   

No two SMBs are the same, their needs and challenges are all very different. In the United States, there are currently 32 million SMBs – 25 million of which are sole traders and gig workers. Their main challenge? Getting paid on time by their customers and managing their own financial admin. 

Whilst their bank will offer them cash management tools and various solutions of that nature, these smaller SMBs continue to use the banks’ retail platform as an individual consumer would do. This is because banks typically charge a fee to open a business bank account. Not only that, but as a BCA holder, you will be able to access solutions that help with ACH, payroll, wire transfers etc, which are services that the gig or sole trader simply don’t need to use and so they just won’t pay to move to the banks’ business banking digital platform. 

With this in mind, we can see that not only is there a gap between how connected banks are to their SMBs, and vice versa, but there is also a discrepancy in the solutions banks provide to solve gig/sole trader specific pain points. The question that banks need to ask is what kind of tools can SMBs use daily where they can manage their workflows, all from one place, pay and get paid easier. This is where we come in to bridge the gap. 

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BankiFi building bridges 

I’m so excited about what BankiFi is doing because it’s the first time I’ve seen a fintech company really understanding the needs of the gig and small business owners. That need to simply get paid and pay faster. The flow of our solution really does benefit both the SMB and their bank, as well as bringing both parties closer together.  

⚒️ For the SMB: 

Our suite of digital solutions allows for gig and small business owners to manage their cashflow, forecast their future financial position, pay suppliers and get paid faster; all from one unified place – their digital bank channel.

These products also allow the SMB to connect their existing accounting platform – such as Quickbooks – so that their invoices once paid can be automatically reconciled. Speaking from my own experience as a small business owner myself, the less manual activity you can do, the better!  

🏦 For the bank:

Utilizing the capabilities of API technology, after the small and medium-sized business (SMB) links their bank account and accounting system, we can extract particular information – such as account balances from accounts not held at the same bank, along with data related to payment requests. This information can then be furnished to the financial institution, enabling them to recognize potential lending possibilities. 

I also believe that, since this is not an app that SMBs can install from their FI channel and be left to their own devices straight away, customer engagement and nurturing is incredibly important. Our service is simple enough to use, however support from the bank – or from us at BankiFi – is crucial to the success of the SMB.

The customer engagement aspect of our offering allows you to get back into touch with your business customers and their needs. I’ve been hearing that banks have been craving to do better in this sense and our solutions really can help to strengthen that relationship, providing the banks with deeper insight into their SMBs. It’s a different kind of channel for this touchpoint, but it’s a really important one as, again, it bridges that space between the bank and SMB that the digitisation of banking services has previously enforced. 

Meet Lindsay at the DCI conference 

BankiFi at DCI-1

Don't miss the opportunity to connect with Lindsay Hodges, our Director of Client Success and Product Management for the Americas, at this year's DCI Conference in Kansas City.
Lindsay will be available to discuss BankiFi's cutting-edge solutions at Stand 39 throughout the event, providing insights on how our digital business banking offering can revolutionise your financial institution.

Arrange a meeting with Lindsay at the DCI conference using the link below:

 
Lindsay will also be hosting an engaging and informative breakout session during the conference. With a focus on understanding the desires of SMBs and how banks can effectively assist them, Lindsay will explore the potential of BankiFi's solutions in enhancing the business banking services offered to small and medium-sized businesses.
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Want to know more?

If you’re ready to transform your customers banking, one of our team would love to have a chat with you.