Are the companies who provide the best UX going to win the battle for attention?
The main issues with business banking are pretty well known — lack of transparency about decision-making, no people to speak to about the important issues, and a sense of being delivered a retail consumer product with a slightly different product name. But none of these will force them into becoming commoditised utilities — however, losing the attention of business owners will.
When a small business owner logs on to their business bank account, they get a segregated, siloed view into their finances. So many financial products operate in individual silos, requiring businesses to spend so much manpower and time in manually collecting and sending data in order to fulfil simple business functions, like doing their reconciliations at the end of each week.
Banks are waking up to the issue
Banks don’t look enough at the impact their decisions make on their customers in terms of workflow and expect that the bank account is the central platform for businesses to manage their finances when it’s really the accounting package.
The recent acquisition of Freeagent by RBS goes to show that banks are really starting to wake up to this issue. They know that the accounting packages get more eyeball-time from SME owners, have far better favourability scores and may even be more trusted than banks.
The companies who provide the best UX who are going to win the battle for attention. From our perspective here at Codat, it’s the accounting packages who are doing a great job of becoming wider financial dashboards, with healthy ecosystems of add-ons, who are winning currently.
What does the future look like?
A great method to get a peek at the future is to look at where the siloed experiences are being effectively broken down currently. The best examples typically come from fintechs rather than banks. One example that we think is great is the Tide-Xero integration, which allows businesses to automatically reconcile Tide transactions in their Xero package.
In the US, Fundbox and Kabbage have made the process of getting a small business loan much less painful with their accounting package integrations, which is an area a lot of banks tell us they are interested to get into. MarketFinance and Growth Street over here are doing similar things and applying them in the working capital finance space, which is where the administrative pain is possibly even greater.
The final step is to push information from other banking products into the accounting packages, so that SMEs can properly manage loans, or direct debits, for example, without having to collect data from several providers, but just see the whole picture from one central dashboard.
The core reason that accounting packages exist is to provide context around transactions. That’s not a business need that’s going to go away, and with the volume of data sources into accounting packages rising, banks will have to find ways to provide more brand value, provide a more relationship-driven model, or compete in terms of functionality and UX to retain the attention of small businesses.