As more industry players realize that traditional FIs simply can’t go it alone to meet all the needs of the modern small business, collaboration has become key. But that collaborative environment is also giving way to a deeper connection between traditional and non-traditional financial service providers, as more firms recognize the value in sharing data.
Izabella Gabowicz, COO of receipt and spend management company Sensibill, recently told PYMNTS that she recognizes this trend blossoming in the small business finance space today – though it wasn’t always this way.
Earlier this month, Sensibill announced it was the latest FinTech in a long string of companies partnering with traditional financial institutions to meet the banking needs of SMBs. The company is collaborating with the Royal Bank of Scotland, which will link its small business customers to Sensibill’s solutions.
It’s a now-familiar partnership dynamic that Gabowicz said works for everyone.
For the small businesses, she said, one of the biggest benefits is that clients no longer have to move from portal to portal, or from app to app, to access all of their financial data and services.
“Users have an improved handle and an improved perspective on their financial health,” Gabowicz said. “Small businesses want innovative services, but they don’t want to have to go to a variety of disparate accounts or apps to get the full picture of their financial portfolio.”
Streamlining transaction history and accessing all financial services from a single place, or from a consolidated few places, is easily recognizable as a benefit to small business owners, who can then “focus on running their business instead of trying to stay on top of their financial picture,” the executive added.
At a time when small businesses are expressing frustration and dissatisfaction with their financial institutions, the ability to access more high-tech solutions straight from their bank, rather than having to go to a third party, is also a major benefit to the FI itself.
Getting small businesses on board with the idea of FinTech-FI collaboration and, ultimately, data sharing was easy. For the FIs, improved customer retention and satisfaction similarly make FinTech collaboration a no-brainer.
“It allows the bank to really focus on the things that are core to them,” the COO noted. “If you try to do a variety of different services for end users, it becomes really difficult to do a good job. You have distracted priorities. But partnering with a niche provider means the bank’s particular vertical they’re focusing on can be done excellently, and they can be hyper-focused on their priority.”
But getting the banks on board with data was a bit more challenging, Gabowicz said.
“The initial reaction [to data sharing] was a negative, knee-jerk reaction that, ‘This is our proprietary data that we collected, and now we’re being asked to share it – that’s a negative for us,'” she explained. “Initially, it was seen as a bad thing. But what’s happening is they’re starting to come around.”
This gradual shift in sentiment is part of what’s behind a recent surge in API usage that interconnects FinTechs and bank platforms.
“Banks are starting to see this as a net positive. In the same way they need to be able to share their data, [so do] other financial institutions and FinTechs,” said Gabowicz. “That means they can build a solution within their own set of offerings that allows them to be aggregators of information in wealth management, or in other areas, to be able to give a broader picture of financial assets – not just the ones in the bank.”
In the case of the RBS partnership, Sensibill is offering a solution that helps small businesses digitize what is traditionally a manual, paper-based process of managing expenses and record-keeping. In the short term, that means easier, faster access to transaction data, so businesses can stay organized and be ready come audit and tax time.
“There is a lot of time savings, and small businesses are able to quickly find a digitized record rather than trying to go through papers or receipts that might be kept in a shoebox somewhere,” said Gabowicz. “They may be running the risk of fines or trouble when they have insufficient evidence that the transactions were for what they were supposed to be.”
But the electronic data that stems from a solution like this is where additional value comes in, she said, and demonstrates yet another way that the sharing of financial data can help both SMBs and financial service providers meet their own needs.
“You can start forecasting where spend is going to be, and that’s where this solution gets exciting,” she said. “It’s understanding where you have been in particular spend categories, and what that spend will look like, to be able to predict cash flow. That’s our vision, and financial institutions like RBS also share that vision.”