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Banks' complex B2B payments opens the door for fintechs

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When business owners apply for merchant accounts at their financial institution, the process entails stacks of confusing paperwork and waiting for acceptance.

Instead, business owners need a simple tool that enables them to put their finances on cruise control and focus on their passion— a tool that simplifies the payment process altogether.

Businesses trust their financial institutions to deliver faster payment options and reliable customer service, rather than third-party providers.
Money is being held too long within these systems, making it difficult for businesses to operate more effectively. If problems do arise (think: a fraud incident), businesses would prefer to speak with a banker who they know and trust from their respected institution, someone who is connected to their financial history and experience.

Small businesses are likely to switch from third-party providers to the financial institutions they trust, if these institutions provide payment services. Trust and service are the combination required for businesses to displace old, familiar processes with newer ones.

Knowing that businesses are willing to make this trade-off puts bankers in a unique position to help support the backbone of their local economies.

By offering a user-friendly, fully integrated way to accept multiple forms of payments such as ACH, credit and debit card, check and lockbox within their institution’s digital channels, businesses can accelerate cash flow and access to working capital. Eliminating paper trails is half of the solution, with the other to automate tedious accounting tasks. Contextual insights and interactive dashboards help businesses proactively manage cash flow, with personalized recommendations, best practices and automated alerts.

Additionally, customized alternatives to traditional invoices replace disjointed or outdated systems, making for a more modern exchange. Finding creative and cost-effective methods for collecting electronic payments via shareable social media links or email enables businesses to satisfy the preferences and lifestyles of their customers.

These types of services allow business owners to collect 82% more payments from their customers, with 45% of their customers making more payments online. And in turn, institutions benefit from loyalty and high adoption rates—about one-third of small businesses targeted will use such new banking services within 60 days.

Faster payments for small businesses are a major area of opportunity this year for banking executives and board members—an untapped market for now. Leading-edge financial institutions of all sizes understand the potential and growth this segment affords and have already delivered a consolidated solution, and the returns are strong. Of these leaders, three Michigan-based institutions have collectively accrued more than $8 million in receivables in their first year in the market.

Financial institutions deploying a small business destination also improve user engagement; most are capturing more than 30 logins per month per SMB, an increase of 40% within their digital channel. Businesses have increased their deposits by an average of 18%, gaining access to their receivables in only 16 days compared to the traditional 33 days wait time.

These results will begin to compound as the market will mature and become saturated with competition within a few short years. Offering these businesses a better way to collect and receive payments will attract net-new customers and strengthen existing banking relationships, surface new lending opportunities, grow deposits—and ultimately, help financial institutions leapfrog the competition.

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