A Targeted Approach To eCommerce Firms’ Biggest Banking Pains

It’s been more than a decade since the boom of neo and challenger banks stepping into the market to fill the biggest service gaps left by FI giants. Generally considered more nimble and digital-friendly than legacy banks, challengers have injected a much-needed dose of technological innovation into the sector, with business banking an increasingly popular focus for new players.

Today, the challenger banking arena is evolving, according to Samir El-Sabini, co-founder and CEO of Juni. In an increasingly crowded segment, neo banks must identify ways to not only compete against traditional financial institutions, but against each other, too.

One means of doing so in the business banking space is to target particular industries, a strategy El-Sabini told PYMNTS can be effective at tackling the biggest and most unique pain points of certain sectors that aren’t necessarily addressed by industry-agnostic financial service providers. In a recent interview, he discussed why Juni is targeting eCommerce and digital marketing businesses with its offering.

The eCommerce Banking Challenge

Perhaps the biggest challenge for eCommerce businesses is simply getting an adequate grasp on finances altogether.

“There is so much to do,” he said of eCommerce business owners’ struggle to manage operations. “Sometimes, you can’t even start thinking about finances, KPIs or business intelligence. It’s very hard to get your head above water.”

According to El-Sabini, there are three major banking challenges that eCommerce companies tend to face.

The first is cash management and obtaining a holistic view of finances. Understanding exactly what one’s capital ranges are, closing balances each month, or whether cash management is even healthy can be difficult, he said.

The second relates to liquidity, particularly as eCommerce businesses often accept payment through a range of payment gateways. A business may have funds coming in, but they can be stuck in a PayPal or Stripe account, unable to be used immediately.

Third, he said, is the challenge of automation and data integration. While eCommerce businesses, as inherently digital-first companies, have the advantage of having access to electronic data about their business operations, understanding how to make use of that information can be a struggle.

The Rise Of Industry-Targeting Banks

Juni aims to tackle these major pain points in a variety of ways. El-Sabini noted the company has embraced Open Banking to allow eCommerce business owners to consolidate and integrate their data across bank accounts and platforms like accounting systems, facilitate faster access to liquidity from incoming payments and provide an overall view of cash flow.

The company is also offering a debit card solution with a cash-back feature, which El-Sabini noted is a rare offering in Europe. The tool can open up new revenue streams for eCommerce businesses based on items these firms spend the most on — for instance, advertising.

By targeting pain points and offering products specific to certain verticals, FinTechs and neobanks may be able to carve out a niche in a competitive market. According to El-Sabini, this industry-focused strategy is the future of challenger banking after years of service providers with more generalized offerings.

“You can become the best generic bank,” he said, “but the other way of being the best is to become extremely vertically focused, something that is customized for one target.”

While the downside to this strategy is, of course, a smaller potential customer pool, the value in this business model is in finding the sweet spot of a market with a large enough end-user client base with fewer competing service providers. The service providers that offer more generalized services, said El-Sabini, may not be the ultimate winners.

“The first neo banks that came out were very generic, because that’s what the big market opportunity was,” he said. “Now, it’s gone 10 years from the start, and I think we’re going to see a lot more vertical players, both from the old banks and also the neo banks.”