With more digital banking options emerging on the U.S. market, FinTechs are turning their attention to the business community, whose demands for a better banking experience are growing louder.
In addition to an enhanced user experience and seamless functionality, corporate and small business end-users are looking for financial services that can provide greater control over and visibility into finances — particularly in such volatile times.
“Finance is generally the number-one friction point in all organizations,” said Alex Wheldon, co-founder of Rho Technologies, which offers business banking services via a collaboration with Evolve Bank and Trust.
The advancement of enterprise digitization has given rise to a deeper understand of the importance of financial data for business leaders. The challenge, of course, usually involves figuring out how to connect a range of disparate finance-related systems together, unlock the data in each, and aggregate it for meaningful analysis and insights.
In a recent interview with PYMNTS, Wheldon discussed why data integration is so vital to today’s organizations, and explored the opportunity for digital banking platforms like those offered by Rho as a logical place to centralize financial data to provide deeper transparency.
Marrying AP With Banking
Rho recently announced a new funding round to the tune of $15 million, with its Series A reveal including notice about the debut of its accounts payable solution within its Rho Business Banking offering.
According to Wheldon, the introduction of AP functionality was a natural extension of Rho’s existing payments offerings, which include domestic and foreign transaction capabilities, card payments and more. But what’s unique about AP, he noted, is that it’s not a function focused solely on the transaction itself.
“It’s definitely more of a process-driven payment,” he said. “It usually involves procurement of some time, you’re going to speak to a couple of people, and there are going to be varying degrees of paying invoices.”
In other words, accounts payable transactions are highly interconnected to other areas of the enterprise as well as business partners outside of the company. As such, data integration is vital to achieving a seamless workflow, from invoice acceptance, to approval, through to the actual act of paying the bill. By adding an AP function on top of a banking solution, businesses have the ability to automatically capture invoice payment data in the same place that the data linked to other forms of payments are stored.
“AP is simply a workflow,” said Wheldon. “It will traverse the business, and the best way to do that is in an integrated fashion — not to have it sit outside the core banking or core finance function in a standalone product. It is very much mean to be living in a centralized location with the rest of your tools.”
The New ERP?
The identification of the banking portal as a centralized hub of transaction data is an important distinction for the industry as it moves to modernize corporate finance. Wherehas historically, the enterprise resource planning (ERP) system has operated as the central data hub for organizations, shifting that responsibility to a banking platform might be a common-sense decision for some firms.
“The bank is the single database for a business,” said Wheldon. “The entire transaction history of the business is in black and white, and it’s only further enriched by different types of payments.”
Consolidating transaction data across payment workflows and technologies, including their bank cards, wires and bank transfers and even paper checks, can yield greater transparency for organizations that would otherwise struggle to interconnect information across a variety of systems.
For this reason, neobanks and banking FinTechs today have an opportunity to launch banking services built with data connectivity in mind.
Not every business can necessarily achieve this data goal so easily, however. When an organization operates with multiple banking relationships and adopts a variety of third-party FinTech solutions, connecting the data dots can be a persistent pain point. But as the conversation of open banking frameworks continues in the U.S., there may be an opportunity for banks to embrace the data consolidation model that has become so important to companies’ financial management goals.
A lack of data integration can prevent organizations from making quick decisions and understanding the true operational health of a business, “unless you’re looking at things all together,” said Wheldon. “This method of banking and working with finance will only continue to proliferate into the future.”