Financial inclusion. This is a hot topic in the world of fintech right now. The question is, why do banks need to support small businesses by offering the same solutions that larger corporations have access to, that help them run and grow their business?
Our Chief Product Office, Marijke Konninckx, provides answers to this question in her recent interviews with IBS Intelligence and FF News’s Salon at Sibos. Here are the highlights...
The evolution of financial inclusivity.
Innovation and creativity are two key ingredients to kickstarting a small business. According to our Chief Product Officer, Marijke Konninckx, financial inclusion is just as crucial for small businesses to begin their journey and thrive. But financial inclusion has not always been a priority for banks.
For years, financial services and solutions that manage cashflow and business workflows - such as ERP systems - have been reserved for the larger corporations of the world. Whereas smaller businesses have had to make do with what their banks have to offer them in the way of digital solutions. These offerings, however, have not created equal opportunities for small businesses to run their business as these larger corporations can. This discrepancy has led to thousands of SME’s being unable to manage their business finances appropriately and eventually close.
"I think it's unfair that, because of the size of your business, you don't have access to what you need in order to be successful. For a lot of people, their businesses are much more than just a workplace, but it's their lives."
Marijke – featured in FF News video @ Sibos
“If you go to a smaller business, they have very similar problems – the only thing is that they did not have any tools at their disposal to manage this efficiently, nor did they have the leverage from their bank to make things happen for them."
Marijke – featured on IBS Intelligence Podcast
Fast-forward to 2022 and thanks to advancements within embedded banking and embedded finance, that same technology that was traditionally reserved for larger corporations is now accessible to every business, no matter their size.
The effect of financial inclusivity on banks and SME’s
Financial inclusion is all about giving SME's equal access to digital financial solutions as larger corporations have had for decades.
Embedded banking solutions can offer SME's a whole new world. When banks integrate this technology into their existing digital channels, SMEs are given their power back.
With embedded banking, SMEs are given a solution that allows them to manage their workflows, cashflow and monitor their AP/AR activity. Utilising these value-added services as a bank gives them the opportunity to resonate with their SME customers and begin to speak their workflow-based language.
By providing these solutions via embedded banking technology - along with the ingrained trust that customers have in financial institutions - banks can begin to eliminate the existential threat that market challengers, such as Monzo, are bringing to the table.
These neo banks have picked up on the existence of open and embedded banking and have embedded financial services into their existing offerings - making them a huge threat to banks as their SME customer's needs are being exceeded elsewhere. Therefore, to stay in the game, banks need to think about utilising embedded banking technology so that they can offer SME’s this holistic view of their financial activity – past, present and future – all from within the bank’s digital channels in order to keep their existing and acquire new SME customers.
“Banks need to be very careful because if they keep on sitting back and doing nothing, businesses will move away from their banks as their trusted financial partner and towards these market challengers who not only allow them to see their bank balance, but their business workflow and health of their cashflow in its entirety.” - Marijke, on IBS Intelligence Podcast
How can BankiFi help banks to achieve this?
With our embedded banking solution, banks can integrate this into their existing digital channels for SMEs to utilise in ways that can help ensure their survival; such as eliminating late payments, saving time on their financial admin through the ability to connect their accounting package - all from one place: The Bank. It's not just for the big businesses anymore, and we're proud to be bringing financially inclusive services to the table for banks to become relevant for SME's.
The bank that provides these financially inclusive offerings to SME’s will become the 'go-to' or the 'front door' for the SME to essentially run their business, ensure their finances are healthy and save them time on financial admin.
Download our whitepaper
In our latest whitepaper, we examine the concept of banks becoming the ‘front door’ for SME’s and why this is necessary to the survival of the bank. It’s time for banks to create a solution that solves the pain points of the SME. Allowing them to run their business all from within the comfort of an age-old trustworthy institution: the bank.