B2B Payments

Finding Front- And Back-Office Flexibility In SMB Banking

The small business FinTech arena continues to blossom as more developers explore ways to address a market historically underserved by traditional financial institutions (FIs).

Small- to medium-sized businesses (SMBs) are often forced to fit within banks' consumer-facing services as they are too small to qualify as a corporate client, leaving an opportunity for FinTech innovators to develop unique products, services and user experiences designed for entrepreneurs, freelancers and SMB owners.

Yet at the same time, there is undeniable overlap between what an SMB would want from a banking provider and what a consumer would want. No single customer — business or consumer — is identical, so out-of-the-box solutions may not work for a freelancer the same way they do for a mom-and-pop store owner.

In a recent conversation with PYMNTS, Michael Brackpool, head of product at bunq, emphasized the role that flexibility plays in being able to address end users' needs. As a provider of banking and financial services for both consumers and SMBs, bunq offers products that target one, the other, or both.

Understanding not only the differences, but also the similarities, between various end users can help FinTechs and banks better service their clients and prepare for an unpredictable market ahead, he said.

The Front-End Strategy: UX

The opportunities to address friction in the B2B banking arena are numerous. While SMBs often do need unique products and services that wouldn't be fit for a consumer, Brackpool noted that, just like retail customers, the user experience is a vital component to fully addressing SMBs' banking needs.

"Typically, B2B offerings are really gray, paperwork heavy, time-intensive," he said. "We think of the user experience as critical and want to apply this philosophy on the business side."

The user experience includes the look and feel of an app or platform, but also incorporates how an end user navigates and interacts with service offerings. For SMB owners and entrepreneurs, the primary focus on user experience should be saving time, noted Brackpool.

"Entrepreneurs value time. They want to get to market and move quickly," he said, adding that this means accelerating customer onboarding and account opening, as well as automating tasks that are traditionally manual, like receipt data capture and spend analytics.

Simultaneously, Brackpool said that there is significant crossover in bunq's customer base, with many consumer users also adopting the platform for use in their professional lives as freelancers. As such, those professionals seek a familiar end-user experience with their banking, yet with features like automated VAT collection and calculation.

The Back-End Strategy: Flexibility

While some services like bunq's VAT tool are designed for the B2B use-case only, other services can apply to both the B2C and B2B customer base. One of them is its recently-announced bunq+1 tool, which allows users to add sub-accounts to card products.

For consumers, this could take the shape of a parent adding a child onto an account, allowing that parent to issue money and watch their child's spending. But the solution is also applicable in the B2B space, enabling managers to issue payment cards to employees and control workforce spending.

Brackpool pointed to this capability as an example of why back-office infrastructure flexibility is just as important as front-office user experience when addressing the B2B market. Developing technology that can easily be retrofitted for either the B2B or B2C use-case enables entrepreneurs and SMB owners to use the same products and services they're familiar with as consumers, yet achieve the more sophisticated functionality they need as professionals.

"There are a lot of parallels between uses on the consumer side and business side," he said, adding that agile infrastructure enables "this innate flexibility to spot user needs and deliver them, whether they're for a business or consumer user."

A Shifting Landscape

Before the pandemic, a new generation of professionals ushered in a surging gig economy and freelancer workforce. According to Brackpool, young SMB owners value flexibility in their own lives more than generations before them; they're seeking a stronger work-life balance and have shifting values that guide how they navigate their lives and develop personal goals.

Banks and FinTechs have to embrace that flexibility, he said, and are likely going to face even greater pressure in a post-pandemic climate.

For bunq, the need to remain agile is the result of growing market potential, from targeting larger corporate users to developing services that can foster a community of SMB collaborators. The pain of time- and paperwork-intensive banking is no longer acceptable, particularly for SMBs and freelancers. And while there's no telling exactly what the SMB banking market will look like in a year's time, what is certain is that it will change.

"There's a lot to explore in the future of banking, and we're barely in the foothills of what's possible," said Brackpool.



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.