CUSTOMER INTERFACE: SMALL BUSINESS BANKING
Getting to know you...
Understanding how small businesses tick used to be the sole role of bank relationship managers. Now, say Codat’s Yasamin Karimi and U.S. Bank’s Irv Henderson, AI is helping them get even closer Small and medium-sized businesses (SMBs) have faced historic challenges over the past 18 months. Enforced closures, a dramatic shift from in-person to online sales, and jumping through hoops to obtain precious rescue funding (for those that could get it) have taken their toll and left this significant economic segment reeling.
At the same time, the sudden somersaults banks had to perform to deliver rapid loan injections at governments’ behest, accelerated the need to focus on scaled digital banking solutions to small business customers remotely, when visiting a branch was no longer easy or desirable. The solutions quickly engineered to plug that gap have opened up a raft of new possibilities, perhaps the most exciting of which is the ability for machines to mimic relationship-led approaches, the loss of which has been long-lamented by business owners who miss the tailored support than banks’ business relationship managers used to provide. Aside from the particular challenges posed by the worldwide pandemic, life has long been hard for SMBs – from the endless amounts of admin that owners shoulder, to the difficulties in managing invoicing and cashflow, and securing the credit lines they need to supplement it. But an NCBI report looking at the initial www.fintechf.com
impacts of the coronavirus on active small businesses in the US was bleak. Using data from the April 2020 Current Population Survey, it found that SMB numbers plummeted by 3.3 million, from 15 million to 11.7 million, or 22 per cent, from February to April 2020 – the largest drop on record. Equally troubling, a report the same year by JP Morgan and Chase Co, discovered that half of SMBs operate with fewer than 27 days of cash reserve, making them particularly vulnerable in the current and any future economic crises. Meanwhile, PwC research among
We’re beginning to think through things like elastic lending based on real-time data… This is an epic journey for banks Irv Henderson, U.S. Bank
469 US SMBs suggested they felt left out in the cold by banks. Although 81 per cent said they still had the same level of trust in their banks as before the pandemic, 55 per cent said they would like them to be more proactive in helping them through their current troubles. And there were indications that usually loyal SMB
customers were willing to look elsewhere to find solutions. Nearly two-thirds (64 per cent) said a lack of transparency, trust and relationships could lead them to choose a new provider, and 61 per cent could be prompted to move, due to a lack of personalised assistance. Irv Henderson became chief digital officer for small business at U.S. Bank two years ago, when the bank acquired the Talech software company that he’d founded. The bank recognised that it needed some of the groundbreaking solutions Henderson’s tech offered in order to address exactly these kinds of problems. He now focusses on helping small business owners to run things better through software. “Before starting Talech, I led the mobile products division at Yahoo!, so I’ve spent a couple of decades thinking through customer experiences and software experiences for business owners,” says Henderson. “Our journey, at U.S. Bank, is increasingly about getting in front of small business owners through software in order to deliver the bank’s services.” Small business owners’ problems also preoccupy Yasamin Karimi, head of product at British software company Codat. She has a background in payment services at Mastercard, UK challenger Starling, and in her own business. Issue 21 | TheFintechMagazine
31
