SMBs — Finally Getting Data Integration
Integration + Data = Goodness
Let me start by saying I have always loved SMBs and have for years wanted to solve problems for the myriad owners of SMBs in America. BUT, what I learned with an investment in SMB marketing services a while back is there is this mistaken ethos that SMBs are a vertical. WRONG !
A body shop owner has very different needs from a florist which is completely different from a coffee shop. That was always the mistake I and others would make, SMB is not a vertical market.
Conversely the idea of serving each of the sub-verticals within SMBs is likely cost prohibitive on a customer acquisition basis as well as a customer service basis.
However there is a common bond among all businesses large, small and in between regardless of the particular business they run.
DATA is the common bond of ALL Businesses
There is an 800 pound Gorilla in SMB land and that is Intuit’s Quickbooks, so you need to get to that in order to add value to the data.
Yes Xero and others have come along to best the king at their own game and are making headway, but QB remains the top dog.
Sadly, Intuit has always been bad at Data Integration. SMB owners spend hundreds or thousands of dollars per month having their accountants get bank data, normalize it and meld it with Quickbooks to get an accurate end of month picture of the business.
Now thanks to the magic of APIs there is a better way.
Taking business data from Quickbooks and combining it with a bank’s data about the same business and voila, monthly close is no longer something to fear and further banks can assess a business’s actual health in near real time.
First let’s look at Railz.ai. from Toronto they deliver a very nice API focused solution for banks.
“Our Accounting Data as a Service API provides a single connection from all major accounting software providers on your Small Business customers.” Railz.ai
Railz.ai is focused on working through banks and other FI’s to combine your bank and accounting data. They connect to Quickbooks of course but also Sage, Xero, Freshbooks, Zoho and even the latest entrant Wave.
The diagram on their website certainly makes it seem easier but look closer and the key here is that the data integration allows the bank to evaluate and deliver credit decisions based on real data, not credit applications filled out again and again.
This is the key to me for something being actual digital instead of being digitized. I want to enter data ONCE and only ONCE.
Of course with live stream updates of other data that is great. If I am a bank customer and I apply for a C&I loan in February and my business is doing well in April and I want another loan, just look at my QB data updates. My revenue is up, my payables are down, give me the damn loan. (well not that simple but close)
The other one in this category is from the UK and named Codat and they cover all the same accounting packages an SMB would want and a bunch I never heard of from Europe. Codat has a NYC office too, so they are serving American customers as well. They layout their process as follows:
I like the steps laid out here as it shows what they are doing from Auth to the output of visual reports. Codat just announced a Partnership with Visa as part of the launch of the Visa Fintech Partner Connect program in Europe.
“The new program will build a marketplace through partnering with fintechs to provide Visa’s clients with digital banking services.”
This is likely part of Visa’s new push into B2B payments that has been on-going for the last two years,
Both of these solutions are API focused for banks to integrate to an SMB’s accounting data to drive financial offerings from banks like loans to SMB’s with less manual work. I say YES to both!
Without a technical deep dive I honestly can not say either is better than the other but considering there are 5,000 banks in America and 28 Millions SMBs in America, I am not worried about us having two similar offerings for the melding of SMB accounting and bank data.
This is a HUGE advancement for banks and SMBs to work together to serve both better.
