The fintech arms race over the past several years has created a new series of winners and losers in the ever-increasing fintech industry. Namely, third-party providers have been remarkably successful at providing payment services and financial solutions for organizations that need them.

In fact, Cornerstone Advisors reported that small to medium-sized businesses (SMBs) annually spend about $225 billion on payments and accounting services from third-party providers. This has created a paradigm shift in the world of open finance and financial technology, with large banks and fintechs on one end and community financial institutions on the other. However, community financial institutions can utilize the same technology to appeal to their SMB customers if they begin to understand the value of enabling financial management workflows and embedded payment functionality available to better serve their customers and increase revenue.

A promising payments opportunity

Embedded payment workflows are a promising opportunity for banks to meet their SMB customers’ needs. By leveraging automated technology that instantly tracks customer invoices and bank data, banks can amass a large amount of valuable information from their SMB customers. Everything from accounts receivable and payable data to information related to financial institutions’ operating accounts, and data related to the specific SMB are all useful for banks to monitor.

Banks can optimize this data to extend personalized offers and business services consultation to the SMB, as well as non-FICO related underwriting criteria to craft unique lending solutions.

With the unique perspective of recurring invoice and payment data, financial institutions can establish a competitive advantage over non-bank providers and anticipate future liquidity needs or appropriate financial products to help the SMB thrive.

Payments data can go a lot further than just helping banks. According to Mastercard, 86% of SMBs wish they could make better use of their data, and there is no secret as to why. The data financial institutions possess for the SMBs can be employed to provide great benefits and create a path to deepening crucial business relationships.

Building relationships and wealth

Financial institutions are being placed in a pivotal position to help SMBs interpret valuable business insights. Not only does the data provide opportunities for growth among multiple entities, it also strengthens the relationship between an SMB and its primary financial institution, as well as the relationship between an SMB and its customers.

SMBs have an innate desire to build their businesses and watch them thrive. In order for consistent growth to occur, SMBs need to establish strong banking relationships. The Mastercard study also notes that 85% of SMBs claim they need a consolidated place to check in on their financial health. Financial institutions have often established a trusted advisor role with their business clients, and can provide an enhanced level of support and engagement that nonbank, third-party counterparts cannot.

Right now, financial institutions have a unique opportunity to better serve their SMB client base, strengthen their relationships, and increase their own revenue by coupling their data with the powerful information associated with invoice and payment activity. Utilizing automated technology to track preexisting customer data, financial institutions can provide the utmost support for small businesses, further streamlining their processes.

By providing this technology from a unified platform and digital experience, a financial institution increases customer loyalty and eliminates the need for SMBs to toggle between multiple mobile applications to thoroughly manage their business finances.

As the data from embedded payment workflows is optimized, the possibilities presented by a positive feedback loop between SMBs and their financial institutions are endless.

As CEO for BankiFi Americas, Keith Riddle brings a breadth of financial services experience spanning new product development, partnership management, direct sales, and strategic market planning.  Keith is responsible for BankiFi’s embedded banking solution strategy and distribution within North America.