Jun 8, 2021

(Re)Open For Business: CI&T’s Small Businesses Report

Fintech
Banking
Smallbusinesses
digitalbanking
2 min
As the countries emerge from pandemic-related restrictions, the needs and expectations of small businesses have changed significantly, CI&T’s report finds

CI&T, a digital transformation company for global brands, has published (Re)open for Business, a new report examining how banks can better serve small businesses in a post-pandemic world. The research revealed that as countries emerge from pandemic-related restrictions, the needs and expectations of small businesses have changed significantly. 

Although the pandemic caused an acceleration in a digital change in financial services, small businesses still want and need banking relationships. 

"Small businesses are considered the lifeblood of the American economy, and banking relationships are the lifeblood of small businesses," said Robin Borelli, Business Director, Financial Services at CI&T. "The post-pandemic rebirth of small businesses in the U.S. will create enormous opportunities for the banking industry. The primary research that formed the foundation of this study revealed significant insights into the possibilities – and risks – for small business-banking relationships of the future."

What did the study find?

The research revealed the necessity of restructuring the bank/small business relationship around three distinct criteria: 

  1. A definition of value 
  • 84% of small businesses reported having "very much" or some degree of trust in their bank, but focus groups and interviews revealed that while there is trust in banks, expectations are rising along with frustration and confusion over complex and opaque fee structures. 
  • Banks are uniquely positioned as the key partner for small businesses seeking efficient, day-to-day operations management such as payroll services, expense management, and tax advice. Banks may not want to provide these as direct offerings, but being a connector can create a deeper customer relationship. 
  1. Digital offerings based on requirements rather than business size
  • Larger businesses will often pay more for banking services because they can afford to. But by looking at needs, it becomes easier to identify groups of customers among smaller businesses that are willing to pay for banking services that address specific concerns. 
  1. Digital as the new way of doing business
  • Small business customers understand the convenience and cost-saving benefits of automation, but still want personal interaction and relationships due to the complexity of their work. 
  • Small businesses have options when it comes to technology and platforms designed to make their lives easier. This presents an excellent opportunity for trusted, reliable partners like banks to help with the technical and operational demands of making these systems work cohesively. 

As countries emerge from the pandemic and the economy now returns to a ‘new normal’, small businesses that have survived will rely on their banking partners. This now gives banks and small businesses a new opportunity to redefine their relationships.

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement. 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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