3 Reasons FIs And SMBs Make Great mPOS Partners

By Ken Paull, CEO of ROAM (@ROAMdata)

 

 

 

ANALYSIS FROM
KEN PAULL,
CEO at ROAM

It used to be that the first stop that small businesses (SMBs) made when they had questions about anything related to financial services was their bank. Their friendly banker was among the first people they saw when they were setting up shop and needed a bank account, a loan to jump start their business, credit cards to finance purchases and even to establish a merchant account if card acceptance was part of their overall business plan.

In fact, most banks had small business specialists who were trained in the bank’s commercial products and available to any small business that walked thru the bank’s doors. But, over the last decade, a few things have changed that dynamic.

The rise of the internet and the simultaneous closing of bank branches has made the in-person personal service more difficult and even less desirable. The financial crisis and pinch on lending has also soured many SMBs on reaching out to their banks, for fear of being told no, or not right now. And, in an age characterized by mobile-everything and payments innovation at a near crescendo, bankers aren’t generally the first people that SMBs think of when it comes to helping them sort through their options for the kind of payments and financial services innovation that could help them run their businesses better.

At the same time, acquirers with access to SMBs are becoming more aggressive in reaching out and presenting them with a variety of options to innovate their business. Acquirers have simply attracted innovators who know that distribution is key to their own survival and who present both a product and a financial incentive to drive innovation thru this channel.

As a result banks are no longer the first stop for small businesses and their financial needs, and they may not even be in the top three. But, ironically, it’s the very combination of mobile-everything and payments innovation that can reposition FIs as a trusted source for SMB’s to access to mobile payments innovation that can transform their business. And, front and center in the SMB decision set is how to adapt mobile point of sale (mPOS) technologies to their business environment.

Here are three reasons why FIs are well positioned to assist SMBs in that decision process.

1. FIs Not Only Know The Customer But Can Reach Them

As everyone knows, mPOS solutions are changing the way that SMBs interact with their customers and run their businesses. Whether they are a retail or a services business, mPOS solutions not only enable card acceptance but capture customer data that supports a more personalized and meaningful experience, connects to back end systems and provides 24/7 support and integration. Never before has been so easy for SMBs to actually access the kind of enabling payments platform that were once the domain of large enterprise customers.

At the same time, SMBs are a highly fragmented bunch so reaching them is challenging.

An innovator has to make a bet that the acquiring channel, which itself can be highly fragmented with hundreds or even thousands of ISOs, can appropriately sell these new solutions to SMBs, a sell that is quite often a very different sell than the standard “box + rate card” sale they are used to. FIs, who know their SMB customers, given their existing financial relationships with them, are not only in a position to represent how mPOS can help the SMB, they actually have access to them. When their banker calls, they generally answer the phone (or open the door).

2. FIs Are A Trusted Channels For SMBs

It’s a fact that FIs took a reputational hit during the financial crisis, as access to credit tightened at a time that most SMBs really needed it. But, recent studies suggest that memory is beginning to fade.

Now is the opportunity to build on that foundation of trust by providing access to a secure mobile commerce platform that can help their businesses, save them money and expand their revenue opportunities. There are over 25 million SMBs in the U.S. alone, and every single one of them has a bank account.

3. FIs Have A Financial Incentive To Want To Play The mPOS Game

FI profits also took a hit during the financial crisis – the decline in SMB landing shaved 20 percent from the profit line between 2008 and 2011. So, FIs – just like every other business in the world – are looking for more ways to add more revenue to their bottom line. mPOS solutions are one way that FIs can not only add value to SMBs by offering them a solution that could help their businesses, but add value to their bottom line by creating an ongoing annuity revenue stream. And, depending on the mPOS solution that is distributed, one that is based on a flexible platform can deliver an ongoing opportunity for FIs to reach out to their SMB customers with upgrades and new capabilities – keeping SMB relationships and profits sticky.

ROAM has had the good fortune of working with a few notable FIs in helping them bring these new solutions to the SMB market. The impact to the SMB and the FI can vary from reducing security risk given that our readers and apps are PCI certified, to enhancing the customer experience while cutting across some of the existing legacy systems and silos that exist in larger FIs to branding via ROAM’s white labeling solutions.

So, when it comes to SMBs and mPOS solutions, FIs clearly have what it takes to be a valuable partner. In an environment where mPOS solutions are becoming almost as endemic as rabbits in spring, it would be nice for SMBs to be able to turn to a trusted third party to give them exactly what they need to keep up with the latest payments innovation, shifting the burden of knowing what to buy and when and why removed away from them. FIs can actually take on the heavy lifting so that SMBs don’t have to.

To hear more of Paull’s insights into how FIs can evolve to meet the demands of the mPOS market, register for “Can mPOS Move The Revenue Needle for FIs?” an upcoming webinar hosted by CUNA, PYMNTS.com and ROAM, here.