NORTHONE: SMEs It’s a sad fact of our modern value system that we equate size with success. The bigger the business, this flawed logic goes, the better – and those companies that have floundered on the Darwinian fight to the top have simply succumbed to their inadequacies, their in-built flaws. According to this creed, pursuing growth is obligatory, not optional; scaling-up is second-nature, not strategic. Yet, there are millions of small business owners in the US with no plans – and no need – to expand. Content with their slice of the pie, the proprietors of SMEs have often bootstrapped themselves to a position where employing a handful of people is a huge achievement: they’ve worked hard to realise their American dream. These aren’t economics majors on a crusade to add zeros to their net worth; they’re humble and provincial, and, together, they happen to employ half of all American workers. So, why is financial administration still such a nightmare for small and medium-sized enterprises (SMEs)?
SMEs – the beating heart of the US economy – are struggling. NorthOne’s CEO, Eytan Bensoussan, explains how his challenger business bank wants to help them not just survive but be recognised for the heroes they are “Historically, small businesses have been a very difficult segment to serve for classic banks,” says Eytan Bensoussan, CEO of small-business challenger bank NorthOne. “They also have a lot of idiosyncratic needs that are unique to their business, so there’s no easy way to do a one-size-fits-all kind of offering. That makes it quite unprofitable to serve them at scale. “The other part of it is that, even if these businesses execute perfectly, they
still go out of business. As a financial service institution, you look at that kind of cohort, thinking ‘how much will I invest in a group of customers where there is a natural churn of up to 50 per cent within five years?’. It makes the balancing of a portfolio of investments much tougher. “And the vast majority of businesses will never get into corporate banking services. They’re going to stay a small business. That’s what they want. That is their definition of success. So they will be permanently underserved. And that’s the problem.” It’s one NorthOne has set out to fix. Founded in 2017 and launched in August last year, the digital bank has its sights set on the pain points that can be overwhelming for SME owners. Even if you have no experience with SME administration, you’ll know what these dread-inducing tasks look like: the inanity of invoicing; the tedium of balancing the books; the endless paper trail and the eternal siren sound of the tax return. “I grew up in a family of small business owners,” says Bensoussan, “and much
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