Pushing Australia’s SMBs Beyond The Basics Of Banking

The ability to switch banks seamlessly is necessary but often rare for small businesses. But with emerging FinTechs and neobanks driving competition in the small to medium-sized business (SMB) banking arena, fewer business owners are willing to settle for less than the type of financial services they require to be successful.

For many firms, it’s not necessarily the banking products themselves that are at issue. Every small business needs a bank account and ancillary services like the ability to accept and send payments.

Rather, according to Ben Pfisterer, CEO and co-founder of Australia-based FinTech Zeller, it’s the way those services are delivered, interoperate with each other and support SMBs’ financial goals that can be a source of frustration for a small business.

As Pfisterer recently told PYMNTS, small businesses across Australia dealing with a variety of challenges, from limited access to capital to late B2B payments, are in need of a banking reset. He discussed why financial service providers need to offer cohesive services that can support the broader cash flow needs of SMBs, not just move money around for their small business clients.

Elevating FinServ Offerings

Small businesses across the world continue to face increased financial pressures even as some economies begin to reopen — and Australia is no exception.

“Particularly following the impact of COVID-19, late payments and limited access to cash continue to negatively impact business survival rates,” said Pfisterer, who called cash flow an “overarching challenge” for small businesses.

Australia has recently put late B2B payments in the spotlight, particularly for small suppliers. Regional governments, including government agencies in New South Wales, have taken to implementing accelerated supplier payment terms, with some major corporations following suit. Yet the latest Atradius research discovered that 54 percent of Australian B2B firms say their invoices have been past-due since the pandemic, with the percentage of write-offs and uncollectible invoices more than doubling.

As a result, more small businesses are urging their financial service providers to offer tools that not only cover the basics, like accounts and payments, but to ensure those tools can actually support their need to manage and strengthen cash flows.

“Traditional banking institutions have expensive transaction processing costs and terminal charges, outdated payments hardware that is cumbersome and challenging to use and slow daily settlement times,” explained Pfisterer.

With nearly $38 million in new funding, Zeller is looking to address those needs for small businesses in the country. Pfisterer noted that the solutions offered to SMBs, including a point-of-sale terminal to accept payments, an account service to store funds and a Mastercard to make payments, all aim to fit seamlessly with one another to support the efficient flow of cash from each point along its journey.

Changing Role Of The SMB Bank

The bank’s role with small businesses is changing, and some financial institutions are waking up to the importance of offering integrated, digital-native tools with a better user experience. Through research and development (R&D) investments and FinTech collaborations, the online banking portal has become somewhat of a next-generation ERP for the small business, able to offer an array of services in a unified interface.

Yet according to Pfisterer, legacy financial institutions have not been able to accomplish this in a meaningful way, resulting in a high percentage of SMBs that switch from their bank to Zeller often coming from one of Australia’s Big Four incumbent banks.

“It’s no longer just about moving money around or holding debt for your customers,” he said. “The greater purpose is to help business owners accept, manage and spend their funds and boost their cash flow by providing more information and data about how their business is managing money.”

That vantage point will guide Zeller as it expands in Australia and introduces new features and functionality. The transactional relationship between a bank and its SMB customer no longer makes the grade for what today’s modern entrepreneurs — coming out of one of the most economically volatile moments in recent history — need from a provider and partner.

With SMBs increasingly seeking data-driven insights, and with the economy continuing to evolve into a cashless one, banks have an “obligation,” said Pfisterer, to support these firms and deliver foundational solutions “in a new, innovative, simplified and easy-to-access way.”