How a customer-centric approach is driving B2B banking innovation

The City of London is a global center for B2B banking innovation

With small- and medium-sized enterprises (SME)s making up around 90% of the global business community, it’s increasingly clear that entrepreneurs, startups, and microfirms will be doing a lot of the heavy lifting as the world emerges from the Covid downturn.

On top of the need to deliver post-pandemic growth, we somehow have to create 600 million jobs for an expanding international workforce by 2030, according to the World Bank.

No pressure, then.

B2B banking innovation can assist SME owners in their mission to generate wealth and prosperity is by giving them the tools to work more efficiently. Removing unnecessary overheads will help too.

In that vein, traditional business banking, with its time-consuming, manual processes and steep, untransparent costs, is a prime contender for reform.

Thankfully, this is already happening at a considerable pace due to the work of digital innovators.

Fintechs and challenger banks are homing in on key insights about SMEs’ needs to build customer-centric money management tools and products that enable businesses to better focus on serving their client base.

But what exactly are those SME needs?

In a Marqeta study of 400 U.K. business bank account holders, three desirable business-to business (B2B) banking features emerged:

* The ability to track income and expenditure in real time (82%)
* The ability to send, pay, and track invoices directly (80%)
* The ability to integrate business banking with other systems like accounting to help speed up decision-making on loans (77%)

Thanks to an era of unparalleled innovation in financial technology, the above functionality is more than just a commercial pipe dream.

Some digital business banking providers are now offering these services, meaning European SMEs have a fast-growing range of options for making financial processes more efficient.

Finland’s Holvi, an all-in-one banking platform for freelancers and entrepreneurs in Austria, Finland, and Germany, is one such digital innovator.

Its CEO Antti-Jussi Suominen says the success of Holvi’s retail bank account, which combines accounting, bookkeeping, and other business administration functions, is due to the fact that it is shaped around customers’ needs.

This is achieved by using automated tools to continually collate and analyse customer feedback.

Holvi’s product managers can see in real time which areas of the service and offering get positive or negative comments. From this, they can gain a better understanding of what that feedback means, and then take appropriate action.

For aspiring innovators, Antti-Jussi cites four key strands for building an innovative digital bank.
These are clear licensing, a well-rounded team of experts, effective compliance policies, and, of course, ensuring products are shaped around customers’ needs.

This smart approach demonstrates that the complex and competitive B2B banking market is about so much more than banking itself.

Another great example of a smart approach is offered by Estonian proposition Xolo, whose platform is designed to make life easier for the growing global army of workers called “solopreneurs.”

For head of growth, Kristin Kirštein, Xolo’s success is due to the way it enables customers anywhere in the world to handle common administrative tasks that require a degree of legal and accounting knowledge.

“With Xolo, we want to remove the administrative burden that freelancers are facing so they can unlock their true potential in building their business,” she said.

The result is a B2B banking business that now supports around 60,000 users in more than 100 countries, according to Xolo.

In France, a growing number of businesses are turning to manager.one, which offers a feature-packed banking platform to help small firms manage daily spending, control expenses, handle payroll, and more — in real time.

Adrien Touati, manager.one’s CEO and co-founder, says the concept was driven by personal experience as an entrepreneur.

“There was a single, recurring frustration: banking, and specifically banks’ failure to offer any features to improve their daily lives as entrepreneurs,” he said.

Each function manager.one develops is driven by real need, as identified by its customers. The result is a business that enjoys between 50 and 100 sign-ups per day, according to manager.one.

It’s becoming clear that the winners in the post-Covid SME landscape in the next few years may be those who tailor their offering to customer needs at the specific stage of their lifecycle, no matter where they are in the world.

Alongside this, they will need to summon up the courage to disrupt not only their own business, but also their thinking. The takeaway message is that business banking has crossed the threshold of an exciting new era — an era driven by digital innovators who, like their modern customers, know no geographical boundaries.

To discover more about how business banking is changing and the role digital payment innovators have to play, download our new white paper now.