Who are banks and financial institutions in competition with?

In the world of financial services, there's a common misconception that banks and credit unions are in fierce competition with one another.  

While they may have their battles, the truth is that their biggest competitors are not across the street in another bank or credit union. Instead, they're right in the digital realm, offering services that small businesses actually need to use in order to thrive.  

In this post, Lindsay Hodges will dive into why banks and credit unions are not in competition with each other but rather with non-bank providers like the QuickBooks of the world and what incumbent institutions can do in order to regain relevance and relationship primacy within gig workers and small businesses. 

Want the scoop in a flash? Watch the video!

The Rise of Non-Bank Providers:

In the United States, non-bank providers have gained significant ground in the world of financial services, particularly within the small business arena.  

One such example is QuickBooks, which boasts a user base of 27 million small businesses across the world. These digital solutions have revolutionized the way small businesses handle their finances, because until now, SMBs have not been able to access such tools from their bank or credit union.  

These challengers and non-bank providers offer a suite of tools that streamline accounting tasks, making life easier for solo-preneurs and SMBs. As well as features such as bookkeeping, invoicing, time tracking, expense tracking, and even inventory management are now at the fingertips of small business owners. 

This automation not only saves time but also increases accuracy, making it a game-changer for time poor businesses. 

Banks and credit unions, on the other hand, have traditionally focused on core banking services, such as deposits, loans, and investments. While these services are undeniably important, they're no longer sufficient to meet the evolving needs of small businesses.  

In today's fast-paced digital landscape, businesses demand a broader range of services to thrive, which is where non-bank providers have gained an edge by going beyond traditional banking services. 

Challengers solving SMB challenges:

Small businesses need more than just efficient bookkeeping and expense tracking, they also need solutions that help them get paid faster.  

With non-bank providers including invoicing solutions within their offering, it seems that they have recognized this need for small businesses to get paid faster. From their platforms, small businesses can create, send and reconcile invoices, ensuring that they receive payments promptly.  

This improved cash flow is crucial for the survival and growth of any small business. From this, it’s clear that non-bank providers have stepped up to meet this critical need. 

Remaining Competitive:

To remain relevant and competitive in the ever-changing financial landscape, banks and credit unions must adapt to and meet the needs of SMBs through providing solutions from their digital channel. This means offering services that cater to their day-to-day operations, like invoicing, supplier payments, and cash flow forecasting. This will help them secure their relevance and strengthen their positions in a digital and customer-centric world.

Want to boost your small business banking in 2024 with BankiFi? Let's make it happen!