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Microsoft in Business Blogs

David Koscheski | Microsoft Director of Industry, FSI

The rise of the gig economy and lifestyle businesses has created an explosion of small businesses across the country. In fact, there are 30.2 million small businesses in the United States, which makes up 99.9% of all businesses in the country employing nearly half of all US workers (47.5%). This represents a booming market with high revenue potential financial institutions cannot ignore. Historically, small businesses have been underserved by banks because they either fly under the radar as part of an institution’s retail customer base, or they have represented difficult lending opportunities. Today, focused technology solutions are offering small businesses a more robust way to interact with banks, which is leading to operations being optimized for thousands of small businesses across the country.

Digital solutions can change the way banks and small businesses interact by enabling financial institutions to become an eCommerce platform for SMBs. Small businesses have often struggled with defining their relationship with banks. They have sought solutions that help process payments quicker and change the way they borrow money and pay for other purchases. The key is for technology solutions to allow business owners to focus more on the business side of things and less on the monotonous tasks of bookkeeping and financial enablement while providing access to capital and tools to grow.

A platform for small business success

People start a small business because it’s their passion. Financial institutions are partnering with FinTechs to offer SMBs a unified solution that allows them to reconcile tasks such as automating invoices and updating ledgers so business owners can spend more time focusing on things like customer engagement, marketing, and product development. It allows small businesses the ability to confidently access banking services to automate processes and optimize their own operations.

One company that is leading this change and embracing this partnership is Autobooks. The company built a platform on Microsoft Azure, making it a trusted, digital business banking suite that financial institutions of all sizes can leverage to more effectively engage small businesses to help them achieve success.

One of the major challenges small businesses have that Autobooks is helping to remedy is getting paid faster. Autobooks simplifies the cashflow challenge and helps businesses get paid up to 9 days faster by automating invoicing and general ledger management. Autobooks also leverages advanced analytics to provide insights into future cashflow enabling business owners to have greater financial control and clarity. This is exactly the type of solution small businesses are looking for to help them manage their financial needs more effectively.

SMBs have also lacked access to cashflow from banks because they tend to prefer catering to larger businesses in need of more capital because it can be hard to understand if an SMB is credit worthy. However, financial institutions are beginning to see the tremendous potential and need for these business owners to access capital to grow. Solutions, such as Autobooks, can help banks identify small businesses that are already operating within their digital infrastructure and provide insight into which accounts they can service.

It’s not just about access to cash flow

Small businesses are looking for much more than just access to capital. They are looking for technology and financial services they can leverage to succeed. Oftentimes, SMB owners find it intimidating to leverage banking services because they are unaware of what exactly they need to apply for services, or how they should be communicating with a bank. Small businesses are now demanding a holistic solution that involves things like lending, cashflow management, and managing the books. Business owners can now leverage technology through their financial providers to access banking services quickly and get answers they need that day or sooner.

Banks already offer the services small businesses need; they are just having trouble accessing these customers effectively. These technologies heighten a financial institutions ability to become a digital eCommerce solution for SMBs by simplifying processes and delivering a robust business payment and accounting platform.

The relationship between the bank and small businesses is changing. SMBs are looking to receive greater access to capital and more robust financial services. The banks that sleep on this largely untapped market will soon begin to miss out. Banks should be looking out for platforms that can help optimize their relationships with small businesses. Solutions like Autobooks can help financial institutions lead with services rather than interest rates.  Autobooks is the fintech solution to helping players on both sides optimize their operations and start benefiting from a stronger relationship.

Learn more about the trends in the financial services technologies in the Digital Banking Playbook.