According to an Adaptive Labs research report, 55% of SMEs would definitely pay more for banking services that were simple and easy enough to use, to free them up to get back to doing the bits they love, and a further 34% would consider it.

If backed up in the real world, those stats are good news for UK neobank startups Tide and Starling, both of whom are going after the coveted by highly intricate SME market, and hardly want to enter into a price war with the incumbents. There’s also Coconut, who is also having a crack.

The thing is, when you drill down to the features on offer from all of them, they all feel rather similar. So, what is it that would make a SME decide one particular tech startup is the must have ‘Nike of SME banking’?

This week I’ve been mulling over the importance of brand metrics. I was recently introduced to  System 1 Research, some of whose work has looked at the way consumers make decisions in markets where there is an abundance of ‘like for like’ products (banking, anyone?).

A key pillar of their thinking aligns around a concept they’ve coined as ‘Fame, Feeling and Fluency.’

• If a brand comes readily to mind, it’s a good choice (Fame).
• If a brand feels good, it’s a good choice (Feeling).
• If a brand is recognisable, it’s a good choice (Fluency).

According to System 1, the brand’s current market share can be explained by looking at the three Fs together, but future market share is a function of ‘feeling’. The science is in – if you feel more, you’ll buy more. Emotional led sales people around the world can finally say ‘I told you so’.

CEOs and leadership teams at Coconut, Tide and Starling are after one thing – market share. There are a lot of programatic and paid acquisition driven strategies that could lead them up the garden path, away from that destination. Here’s hoping they’ve realised it’s not just about products, feature, comparison tables and fancy apps, but it’s about hitting those three Fs harder than their peers. Brand investments like that still takes a degree of faith for senior leadership teams. Lucky startups are risk takers.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

The workplace is the new bank branch, and a few fintech startups are starting to realise the power of this distribution channel.

Like retail is a digital-yet-physical omnichannel play, so too is the distribution of financial products through the workplace. To get to the end customer you have to be digitally savvy and relevant, but you also have to navigate multiple obstacles before you hit pay-dirt, namely HR managers, CFOs, MDs, Team Leaders, Payroll…not to mention the receptionist, the arch enemy of every sales person. It’s not for the faint hearted, selling into SME land. Ninja skills are a must.

UK based Upgrade Pack is one of those fintech’s having a crack, and recently launched a crowdfunding campaign via Seedrs. At the time or writing, 56% of the round had been filled.

The company’s closed marketplace allows businesses to offer customers and employees access to discounted flights and hotel upgrades across the world. It’s a clever way of tapping into the growing ‘bleisure’ market’, the concept of combining business activity with leisure time – like a weekend in Paris tacked onto a busy week of meetings, confused train journeys and croissants.

Unsurprisingly, bleisure is popular among millennials. A Hilton Hotels & Resorts survey of business professionals found that nearly 70 percent of respondents aged 25 – 35 wanted to tack on leisure time on top of their work trips. The digital nomad, made famous by slashies (Bali based yoga trainer by day, worker by whenever) must represent the pinnacle of millennials bleisure aspirations. I’m not going to lie, as a millennial myself, a bleisure flow state sounds pretty good to me.

Benefits like travel and hotel discounts and points used to be the domain of credit card companies. But now companies like Upgrade, Zenefits and many more are getting in on the game, bringing financial products with them. With millennials and younger generations eschewing credit for buy now pay later programs, or other forms of payment, benefits need a new home. Employers, ever eager to pacify their millennial workforce and ‘retain talent’ are somewhat easy targets for these sorts of programs. They do solve a problem – until of course everyone has them.

At the end of the day, there isn’t much of a substitute for a great work culture, benefit program or no benefit program. But we’ve all slogged it out in jobs that didn’t exactly measure up on that front, so if something can ease the pain of dealing with Mike in payroll, many corporate soldiers will take it.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

Ask any small business owner raising money what the most non-transparent and contentious part of the process is, and they’ll most likely tell you it’s setting the valuation.

Navigating the valuation valley of death is more an art than a science, those who have traversed it will tell you – a rather ironic statement considering it’s a financial output. But like Mr Market and his infamous irrationality, valuations also have their own emotional drivers, often deeply disconnected from value.

But in a world of cloud accounting, discounted cash flow models and ‘AI’, does it have to be this way? Surely there is a rational panacea to all this hard thinking, competitor research, rumour and valuation innuendo founders have to grind through with investors and financiers?

Well, if the practical Scots have anything to do with it, a valuation elixir may be on the horizon for the weary founder community.

Listings Ledger, a spin out from the University of Strathclyde claims its patent pending real-time company valuation technology will help smaller firms access corporate finance by providing more transparency and rigour and less manual calculation. The platform crunches data from Companies House and stock market financial data to calculate an up-to-date valuation.

An on point, no-debate-to-be-had-here valuation is a big promise, and no doubt there is a lot more to the secret sauce than just what’s been talked about in a few press releases to date. For example, how are new companies that don’t have listed stock market peers treated, or private company competitor data analysed and factored? And, at the end of the day, isn’t price just a reflection of opinion – how is this accounted for?

Having both raised money to fund a business and used secondary markets for buying and selling unlisted shares in small companies before, there is no question that technology like what Listing Ledger proposes could go a long way in making it easier for parties on all sides of the financing table. But getting those involved to ‘buy’ into the process and put all their pre-conceptions aside about how a business should be valued may be the hardest thing of all.

Then again, I did read the Holy Grail itself is rumoured to reside in Scotland, so perhaps its birthplace gives Listings Ledgers all the location ‘edge’ it needs. Now that would make a great marketing campaign.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

This week Mastercard launched a report in collaboration with CB Insights where it made the not so terribly startling prediction that SMBs would ‘become the next battleground for fintech’ in 2019. I think SMBs have been the battleground ever since the word fintech was coined, however the market has proven incredibly hard to crack.

One key area that the report did zone in on, which I think is interesting, is the renaissance of the point-of-sale system, or POS. Its centrality in the SMB ecosystem, both in driving business for an SMB and in providing a platform for fintech plugins is still widely under recognised, and under-utilised.

The report notes a few companies who are starting to embrace this privileged position, by branching out of pure hardware and basic software capabilities and into payment, sales enablement, inventory management and CRM hubs. These POS systems are generally also compatible with cloud accounting packages, the hub on which many fintech lenders sit. All these parts of the ecosystem are heavily dependent on each another, creating a symbiotic and hopefully stronger financial infrastructure, ultimately powered by a layer of dynamic data.

The report calls out some of these POS systems – Toast, Upserve and Toronto based global player Touch Bistro, a company I remember working directly with on an Australian integration, during my time at Tyro.

Square of course is rapidly deploying into this ecosystem, having seen the forest for the trees years well before many others. That, or Jack and co were simply brave enough to act on their foresight.

Proof its continuing to lead the charge in the SMB battle came in late January, when Square launched Square Card, it’s SMB Mastercard debit card. The card allows business owners to draw on their Square takings, and also offers an instant discount on purchases made at other Square sellers. Deceptively simple, and an idea Amex could and should have monopolised on long ago via their Shop Small initiative. It’s one of those ideas a ruthless focus on the core customer – SMBs – allows platforms like Square to launch.

Keep an eye on the POS platforms, as this is where a good degree of the action will take place going forward.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

Strategic partnerships are booming in this sector globally, as the magical tech-meets-distribution sweet spot sees more banks and fintech vendors cuddling up.

One needn’t look further for proof than news out last week that British based invoice financing platform MarketInvoice had closed a £26 million equity funding round with Barclays and Santander.

Barclays have been involved with MarketInvoice for some time, after acquiring a minority stake in the business in August of 2018. Banks, like Barclays, are slowly realising deploying growth capital to SMEs isn’t something they are equipped to do – from a risk management or digital delivery perspective.

Invoice finance isn’t child’s play. There are plenty of traps for new players, and technology isn’t always a failsafe against rogue business owners and fraudulent activity. Automating the credit-decision process is still a challenge, and imperfect information sets, even in cloud accounting software, still present challenges and risks to lenders.

But the upside, if you can get it right, is huge.

To get a sense of the nuances within this industry in the UK, the UK Finance body reports are a good starting point. The Q2 2018 report sheds some light into the ebbs and flows of the various financing flavours that make up the sector: Here are some highlights.

• Export and Import factoring grew by 13.1% over the quarter, while Export Invoice Discounting fell by 9.9%.
• UK invoice finance growth overall trails asset based lending, however its slice of the total lending pie is significantly greater.
• Construction, followed by retail and transport were the fastest growing industry sectors
• The two sectors with the biggest concentration of clients, when measured by turnover are £ 0.0-0.5M, at 12,193 and £ 1.0-5.0M, at 13,289

Numbers have been fairly static on many growth fronts for the UK sector over the past year or so – possibly a Brexit or trade uncertainty signal flowing through into growth investment decisions made by SMEs. While there is room for growth given the various statistics on growth capital demands more generally, finding the lever is key. It is probably less a ‘do we have capital available to deploy’ challenge for invoice finance businesses and more a lack of understanding about the product set amongst potential borrowers, something many vendors can tell you about in this space.

Perhaps MarketInvoice will use its new working capital to raise the profile of the sector to the benefit of the many startups in the ecosystem. Someone will need to bite the bullet and make this investment for the sector to grow.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

When it comes to user experience, and engaging with the brands we love, we’ve all mostly moved on from downloading individual business apps. Nowhere is this more obvious than in the food ordering world, where aggregation platforms like Uber Eats are fast becoming the Amazon of eateries.

But what powers those systems? What makes your order travel seamlessly between your iPhone and the kitchen, then all the way back to your door?

Platforms like Flyt, who was acquired this week by global food marketplace Just Eat for £22 million.

A middleware service, Flyt allows hospitality retailers to connect orders from services like Uber Eats, directly with their POS, bypassing double keying and extra data entry by staff onsite and updating the kitchen instantly, who can begin prepping the food, shortening the kitchen to door estimated time. And you and I both know that is a big determinant about who we choose to order from.

While a technology like Flyt might not seem like a game changer to you, for small businesses, who live and breathe on efficiency and reduced headcount, these services are basically pre-requisites for survival in the cut throat world of digital food. Mom and Pop processes and clunky systems will now see you out of business in the time it takes to heat a pot of pasta.

Flyt may not be a household name, like Uber Eats, but it powers a good number under the hood, and it’s another example of how integration layers and platform connectors are embracing the huge opportunity that comes with the expansion of the digital food market. It’s an opportunity that can be realised without the added complexity of having to build a consumer facing brand, like Uber Eats.

Services like Flyt haven’t forgotten payments.

The platform has partnered up with global fintech Adyen to enable restaurants to create a customised chatbot for Facebook Messenger, that can take payment within the app. From a user experience perspective, it’s very straight forward. Open the app, select the restaurant location and enter your table number. Hey presto, your order appears, straight from the Point of Sale, and you can pay with your stored and verified payment option then and there. I’d go back to that restaurant, and hospitality venues know it. User experience on steroids.

Plug and play logistics, ordering, payments and infrastructure makes starting a business all the easier these days. Perhaps soon it will be as easy to open a physical store as it is an online one, as the worlds merge closer and closer together.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

It’s the second week in a row I’ve been led, by my research, towards the Royal Bank of Scotland. This must say something about how heavily they are involved in the fintech scene. It increasingly seems like they are at the centre of a growing fintech galaxy, within the wider global universe.

Last week I was led to RBS when I took a deep dive into their multi-brand strategy, which had all the hallmarks of FMCG.

Going back as far as November, RBS also crossed my path when I wrote about their investment in Mettle. This was clearly something that coalesced in my brain, percolating in the background, and somewhat unconsciously drove last week’s insights.

This week I find myself back at RBS again, via news that Tide, a UK SME bank has partnered with ClearBank, the latter of whom is in the process of applying for a grant from the RBS Alternative Remedies Package. All roads, it would seem, lead to RBS, who’s money is poised to cycle through the fintech system through multiple routes!

What will they do if they get the money?

According to Finextra, the bid involves the two upstarts coming together to take on the big challenges SMEs face in the UK, including opening of accounts (only 4% of businesses switched banks in the past year). Switching services are available to make the process less painful, but fewer than 0.5% of those that switch use them.

Market differentiation is another pain point the two companies will look to address through the partnership. In a world of vanilla business banking products, why go through the pain of upping and moving for no real upside in the form of easier or smoother access to credit, or less time on business admin?

Today it’s believed Tide has 1% of the 5.6 million SME market. With a little money from the RBS remediation fund and some clever strategic partnerships, like the one with ClearBank, there’s good odds they could steal a lot more.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.