The Integration of Banks and Fintech is Imperative for Healthy Business Finance

By Carlo Gualandri, Founder, Soldo.

In workplaces around the world, employees are still trudging through excel sheets, searching high and low for missing receipts, reluctantly covering costs in advance out of their own pocket and waiting too long to be reimbursed. This strained and inefficient picture was recently researched by Soldo in a study of 4,000 businesses in the UK in partnership with YouGov. The study revealed:

  • Up to £102.6 Billion of company spend is left unreconciled by a fifth of UK businesses each year
  • 18% of businesses accept 10% of unreconciled monthly spending due to lack of efficient processes in place
  • More than a third of financial decision makers do unnecessary financial detective work at the end of each month to identify company spend
  • Nearly half of all UK businesses asked (45%) said the level of control over company spending is one of the biggest challenges to the business in 2018

It is paramount that this unhealthy picture of inefficiency be remedied as businesses become ever more competitive during a period of increased uncertainty around Brexit, among other world events. Critical to this change is the growth of new innovative solutions which have come about due to open banking which allows technology companies to leverage banking capabilities and innovate on top of them.

To date, we’ve witnessed significant disruption within the financial services sector, with fintech bringing about new innovative solutions, primarily in the B2C space as opposed to the B2B space. The former is a lot easier to move in – you don’t have to face the hurdles of strict regulations that accompany business finance technology. Moreover, the consumer market is a lot easier to penetrate as early adopters of fintech are open to trying something new dependent on how useful it could be and how cool it is; marketing a fintech to the public is generally a lot easier.

In comparison, business owners need to be confident that a new fintech product is reliable, cost effective and trustworthy before adopting it. Fortunately, there are providers out there that can provide such solutions, especially when partnered with existing banking operations for a more streamlined experience. There are a growing number of emerging B2B companies that are proving their worth in the corporate environment. In addition they   are built to be compatible with incumbent systems and process, and as such helping to make business transformation through financial technology a reality:

Neyber is a great starting point – it’s a multi-award-winning financial wellbeing provider that helps UK employees to be better with their money. Neyber essentially partners with employers to support their workforce’s financial wellbeing, with access to affordable, salary-deducted loans, financial education insights and a range of savings and investment products – at no cost or risk to the employer.

Neyber recognised that by partnering with employers we can create a more inclusive and affordable approach to consumer lending. Since its national launch in 2016,  Neyber has lent over £100m and brought on board over 160 major employers in the UK, with an addressable employee base of over 1m UK employees,” Monica Kalia, Co-founder & CSO, Neyber, said.

GapCap is another excellent B2B fintech that’s making cash flow easier for UK SMEs. Their core product is focused on freeing the cash tied up in unpaid invoices; a no-nonsense, modern take on factoring. The process is simple – upload the details of the invoice you require financing for alongside information on the customer. From this, the team at GapCap review the information provided, validate the invoice and come to a funding decision within 24 hours. Once its validated GapCap will immediately advance up to 85% of the invoice value, with cash in your account in minutes. As soon as your customer pays the rest of the invoice, GapCap will forward you the remaining percentage of the invoice, minus a small fee.

Flexibility is an issue where the antiquated traditional banking system is victim. With big banks shackled to outdated credit policies, their ability to formulate bespoke financial services for each client is extremely limited,” Alex Fenton, the Founder of GapCap said. 

“By building off a fintech platform, GapCap have grown from a blank canvas, enabling our services to be finely tuned to each client, a feat traditional banking built on pre-tech systems has yet to master. The rigid mechanism traditional banks are compelled to adhere to are slowing down businesses – people want to access their business banking on the go on digital platforms. In the age of internet 4.0, it’s important businesses have the opportunity to access services through faster, better assistance only achieved through technology.”

CrowdCube has perfectly demonstrated how to disrupt the fundraising element of business with the democratisation of investment. The company provides entrepreneurs the ability to take back control of raising finance, and investors the ability to handpick and invest in the businesses they want to back. Over £460m has already been invested on Crowdcube, funding more than 600 businesses as a result.

Disillusioned and lacking trust, customers of Banks and traditional financial institutions were hungry for change, and greater choice, which is why consumers have embraced fintech and the sector has really taken off”, Luke Lang, Co-founder of Crowdcube said.

“We launched Crowdcube with a mission to democratise investment by giving entrepreneurs the ability to take back control of raising finance, and investors the ability to handpick and invest in the businesses they want to back.” 

“We’ve built a business on closing the gap between companies, and it’s community of customers and advocates, which is a concept at the heart of many of today’s fintech companies. It’s fair to say that there are no traditional financial institutions that have that same collaborative and inclusive connection with their customers. For me, that’s what sets fintech businesses apart from the old world of finance – they recognise the value of making their customers and their community an integral part of their company and are going from strength to strength as a result.

Finally, Solving the challenge of automating, delegating and controlling company spending is Soldo. Our strength lies in our ability to simplify company spending and automate the expense process. Moreover, it integrates easily with existing accounting systems to save businesses time and money. We’ve recently integrated with Starling Bank, the digital-only challenger bank, in order to provide real-time payment solutions. In order for businesses (and banks) to thrive, we need see more of the same across the B2B landscape to ensure the best cash flow possible.

In today’s fintech era services that have traditionally been the privilege of fortune 250 companies should be accessible to businesses of all sizes.

We have built Soldo as an enterprise grade solution that totally resolves the problem of managing company cash flow via smart prepaid spending cards coupled with extremely powerful technology that automates the reporting and reconciliation of any spend at source. It can be used by large corporations and SMEs alike to save time and money by eliminating the arduous tasks associated with the the control, delegation and reporting of company money.

Together, banks and fintech can create the kind of automated, streamlined and cost-effective operations that we have come to take for granted in the rest of our lives. Time to take that level of efficiency to the office. Banks and businesses who do not, will be left to flounder.

Related reading