Consumer payments have come a long way in recent years to the point where we can now make payments and split bills in an instant by tapping phones, watches or even rings on card machines.
At the heart of this transformation is a new wave of challenger banks that have created a smarter, more personalised banking experience. They go beyond traditional bank accounts and offer analytics which allow us to see a breakdown of where our money is going, and enable us to split our funds across multiple pots to save for specific things. They have sleek onboarding processes, beautiful interfaces and agile infrastructure, making this process so simple that it barely feels like banking at all.
While the customer experience is second to none in our everyday banking, a very different picture emerges when it comes to small businesses.
Despite SMEs being the engines of the global economy, accounting for 95% of the world’s businesses, this segment of the market has been historically overlooked by banks. And as a result, SMEs wanting to trade internationally are met with highly complex processes and a host of lenders, brokers, financial institutions, plugins and processes that result in a cumbersome and expensive stack of technology for limited gain.
In short, for business owners, the difference between making payments in their daily lives versus their working lives could not be greater.
Taking inspiration from the consumer space
Today, people want their banks and financial institutions to provide them with the same streamlined user experience they receive from their everyday apps. While the proliferation of challenger banks in recent years has met that need for individuals, corporate solutions are lagging behind.
This should come as a bit of a surprise, since there is considerable overlap between consumer and corporate pain points. While corporates and individuals make payments for different reasons and on differing scales, fundamentally both want payments to be straightforward and affordable.
For example, a consumer wants the ability to make instant payments so that family abroad can access funds easily. In the same way, a corporate wants the ability to make instant payments to its suppliers so it can get the products it needs and ensure accurate cash management.
Similarly, transparency on prices and processes is equally vital. Businesses often find themselves in the dark when it comes to the costs associated with moving money across borders, and often face delays which result in uncertainty. Nowadays we wouldn’t put up with this as consumers, so why do we expect SMEs to?
Overcoming the barriers
Small businesses should not have to scramble to find ways of paying suppliers abroad as well as receiving payments from international clients, especially in an increasingly globalised world where very few companies operate using a single currency.
Without a solution tailored to their exact, usually evolving needs, small businesses are left with no choice but to resort to using services that were never designed for them. This means coughing up high transaction fees and accepting payments systems that take several days to settle, creating significant uncertainty.
SMEs need a global bank account, coupled with a treasury management system, that is tailored to their needs and fit for purpose.
One-stop-shop for SME banking
Rather than relying on a collection of different software and plugins that each perform different functions, creating layers upon layers of complex technology systems, businesses need a solution that allows them to complete all their key functions in a single place.
Central to this should be a one-stop-shop for SME banking. This can go a long way, and beyond just making international payments more efficient, it can help businesses grow and maximise their potential. Centralising all treasury functions into a single place improves operational stability in the long-term by removing plugin tangles and convoluted processes. In turn, this means SME owners have a much clearer view of cashflow, making them better placed to act strategically.
Perhaps most importantly is the ability to perform all key treasury functions from a single dashboard – from making international payments quickly to hedging FX, This frees up business owners to focus on growing their businesses instead of dealing with administrative issues associated with international payments.
It’s time to import the customer-first mindset that has been driving this revolution in the consumer space towards more accessible payments and banking into the corporate banking space.
Author: Laurent Descout, CEO of the treasury management fintech NEO