BankiFi releases new whitepaper in partnership with RedCompass Labs uncovering SMBs large scale shift to third-party service providers
BankiFi, a leading provider of embedded banking solutions, has released a new whitepaper in partnership with RedCompass Labs, a world leader in good and bad payments technology. Titled “SME Banking Channels: converting a money pit into a business opportunity,” the report explains the challenges banks face when offering digital solutions and how banks can most effectively and lucratively deliver cutting-edge technology.
The whitepaper found that, although most SMBs initially look to their financial institutions for payments and accounting services, most banks are unable or unwilling to provide solutions that are on par with third-party services. It further notes that a rise in open banking by about 30% shows that small businesses are increasingly turning towards third-party service providers.
It also reveals that, between technology costs and staffing costs, banks regularly struggle with the cost of ownership for their in-house digital channels. The report concludes by noting that banks are able to eliminate these costs by partnering with external service providers to offer top-of-the-line technology at the best price for the bank.
The whitepaper takes full inventory of the small business market in the United States, stating that small businesses make up 90% of all businesses in the country and employ roughly half of all Americans. The study also notes that small businesses in the U.S. spend about $225 billion annually on payments and accounting services.
“We’re seeing a real crisis for both banks and small businesses,” said Keith Riddle, CEO of BankiFi Americas. “There is plenty of demand for payments and accounting services among small businesses, but banks are disincentivized to offer those solutions given the current state of the market. Through external partners like BankiFi, banks can have the best of both worlds, offering the best technology with minimal cost to the bank itself.”
Kjeld Herreman, Head of Strategy Advisory at RedCompass Labs explained that, “In our discussions with financial institutions, it became apparent that it was quite challenging for them to quantify the costs and the benefits associated with their SME banking channels. We’ve developed a model for banks to better understand these drivers in order to refine their channel strategies for this important client segment.”