Brex is a B2B Bank ?
Mercury an actual B2B Bank and there are others too… More than you know.
Mercury is thought to be the hottest planet as it is closest to the Sun. Mercury is also a hot Digital Only Business Bank but unlike planets where only one gets to be next to the Sun, there are actually a lot of Digital Only Business Banks and if VC funding is any indicator, they are all HOT !
Brex has recently been running ads touting Brex as a bank, not simply an expense management app with a card.
“The campaign targets SMBs with a ‘less is more’ message so owners can worry less about finances and do more to grow their businesses.” Tearsheet July 2021
Having marketed to SMBs during my time at First Data I can assure you the main message every SMB wants is
“Help me focus on:
my main business” <plumbing> <cake baking> <coffee shop>
NOT <banking> <finance><marketing> <accounting>
SMBs started the business to do that thing they do.
So why is Brex now going into the broader offering of a Digital Only Business Bank? If I had to guess, it is growth. Blue Vine started as an online lender for SMB to give easy access for working capital and now they offer a checking account. Is this the great re-bundling of bank services, yes it probably is.
The results of a search on Google for Small Business Bank netted these 3 ads before the search results. Funny side note the actual search results netted mostly the Mega Banks.
First is Mercury next is Novo and then Brex.
The Brex Banking campaign focuses on Simple and Easy. Although if you read the copy for Mercury, Novo and Brex.
- No Minimum Balance
- No Fees
- Sign up in Minutes
These seem to be the focus with each trying to differentiate and only Mercury mentioning Cashflow Analytics and API Access. I get the Cashflow Analytics as I often say that Cashflow is the literal lifeblood of an SMB. But API Access to a small business owner seems very Silicon Valley centric, which is where Mercury (the company not the planet) is based.
Jim Bruene wrote on Jun 24, 2021 for Fintech Live a story entitled “Top 12 U.S. Online Digital Banks for Small Businesses (SMB)” Wow, I thought this is perfect for this blog post on B2B Buzz about SMB banks and Brex.
Jim does a good job defining what his list covers. I might note when I was at Citibank a long time banker pulled me aside to explain banking to me:
“Pools and Flows” Ok, I said, that is it? “Yup, Banks pool money and move money”. Admittedly an overly simplistic view but it did simplify it for me. Jim adds the key credit element to the definition but he also keeps it simple.
From Jim Bruene’s defintion
- deposits (e.g., cash-holding account)
- debit or charge cards
- credit lines
He well points out “Under that definition, PayPal is a business bank as is Square and Amazon. But Kabbage which only offers a credit line, is not.” Jim clarifies he does not include Square or Amazon as they are not per se SMB focused.
Here is his list of the top 12 SMB Digital Only Banks:
First thing you notice, no Brex. That is ok, they are new to this whole “We Are A Real Bank” marketing campaign.
It is worth noting the same author wrote a story for the same publication “Top 15 Online Digital Corporate Credit Cards for Small Businesses” and guess who is Number One on that list, yes our friends at Brex.
Note that the ranking is based on a FAB score NOT number of users. FAB is their own proprietary score based on a variety of factors…aka Secret Sauce. Other than Relay FI with a measly $4M check out the VC funding .
Grasshopper at $131 million, Rho at $120 million and Lili at $80 million plus the others seems to indicate that VCs are all in on SMB Digital Only Banking.
After Azlo from BBVA closed which the article from Fintech Live mentions, I asked the question “Is there a place for a Digital Only SMB Bank?” The overwhelming answer then was YES and here are the receipts for that answer.
One last key point on Small Business Banking. Cash Flow is king for an SMB. I give full credit to the Brex marketing team for understanding this key point.
I am amazed how few SMB bank ads or messages focus on this key point.
I am glad to see that the millions of US based SMBs now have digital only choices for banking. Having opened my own SMB business account at a MEGA Bank recently, I can assure you it was a frustrating on-boarding experience.
