#SmallBusinessObsessed

Welcome back to?#SmallBusinessObsessed, our?free?bi-weekly?newsletter?that?gets you?up to speed?on?small business banking.

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SMB Banking News

Our take on the latest small business banking news.

Neobank Lili announces new account, Lili Pro, geared towards freelancers who are growing their small business

High Level:

• Like their standard account, Lili Pro has no minimum balance, includes 38,000 fee-free ATMs, automatically sets aside money for taxes, and allows for payments to show up in a customer’s account up to two days before they’re paid. The pro account also features an invoicing tool which allows users to create and send out unlimited invoices or receive direct payments.
• The global freelance platform market size is expected to reach $9.19 billion by 2026, at a CAGR of 15.3%, according to a report by Orbis Research. Freelancer-focused challenger bank Lili launched in January 2020. And it’s had significant growth since. Users grew by 1,500% in one year, according to the company. Today, the challenger bank has over 200,000 users.

Go Deeper:

Read the full article on?Tearsheet.

Take Away:

As newer fintech challengers emerge, we are seeing a focus not just on small business, but other niche sub-sectors that remain underserved, such as minority business owners, micro-businesses, freelancers/contractors, and gig workers. Although there is always a risk in focusing exclusively on sub-groups (thus reducing the serviceable market), the lesson should not be lost: in general, small business owners (regardless of their business model specifics) have been underserved — and these up-and-comers are finding innovative ways to provide much needed solutions.

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Why Square acquired Afterpay, a leader in Buy Now, Pay Later (BNPL) services, for $29B in an all-stock transaction

High Level:

• Concerning the deal, Square CEO Jack Dorsey said, “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers.” In the US, Cornerstone Advisors estimated that $24 billion worth of goods were purchased with BNPL programs in 2020, and that in 2021, that amount will nearly quadruple to roughly $100 billion.
• According to industry expert Ron Shevlin, this deal is really about “Bringing AfterPay’s merchant relationships into Square’s seller ecosystem and converting AfterPay’s existing customer base into Cash App users. Square wants — and needs — those higher income consumers in order to keep attracting (and holding on to) new merchants to the platform.”

Go Deeper:

Read the full article on?Forbes?(limited paywall).

Why it Matters:

All of the major platforms — PayPal, Square, Intuit — are engaged in an arms race to win the payments war, and each are racing to fill the gaps in their offerings. These companies are pushing hard to become the day-to-day hub for business owners in a push to capitalize on a massive revenue opportunity. Many of these entrants initially entered the SMB market by offering much needed services like cash flow management, accounting, and digital payment acceptance.

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PayPal has finished coding its so-called "super-app", but will still be adding core services into the future

High Level:

• The first services to be added are a savings account, bill payment, cryptocurrency management and a new two-way messaging feature for P2P. Additional super app features slated to roll out in the next several quarters include personalized, AI-powered shopping offers, the ability to manage PayPal’s BNPL installment loans, and two-days-early access to direct deposits.
• “The way I’m looking at success with the super app is what kind of engagement levels do we get, what’s happening to our average revenue per active account,” said CEO Dan Schulman. “Every merchant, whether it’s small, midsize or large, is envisioning a seamless omnichannel feature, where physical and online kind of blur together and they start to use that to digitally interact with their customers.”

Go Deeper:

Read the full article on?American Banker?(paywall).

Why it Matters:

Fintech challengers like PayPal will continue to grow and attract a wider customer base by largely following a tried-and-true game plan: offer customers the solutions they need to make their financial operations easier, then offer banking products to deepen those relationships and supplant FIs from the relationship. In this case, a “super app” allows PayPal to push out a variety of services to customers all from one app, in a bid to capture an even bigger wallet share. By partnering with Autobooks, FIs can quickly level up their digital platform to attract those small businesses that are searching for better small business tools.

Free Resources

Blog Post | Why the ability to accept online payments will lock in — and transform — small business relationships at your institution

Out of necessity, small businesses are searching for an easier way to accept payments and make deposits. Fintech challengers are capitalizing on this opportunity — and supplanting financial institutions (FIs) in the process. To remain relevant, FIs must refine their small business offerings and offer similar digital payment capabilities as the disruptors.

To meet ongoing consumer demand, small businesses have sought ways to transition from in-person to online payment acceptance. For the most part, it hasn’t been easy.

The problem: the majority of FIs simply have not made this technology available to their small business portfolio. Most FIs offer a reliable solution for payables (online bill pay), but they just aren’t as well positioned when it comes to receivables (online payment acceptance).

Continue reading on Autobooks.co

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Upcoming SMB-Focused Events

Webinar | Monthly Thought Leadership Series

SMB Banking in the New Digital Normal: Exploring the challenges and opportunities in a crowded competitive landscape

The digital revolution has arrived — placing new demands on small businesses and financial institutions:

For small businesses,?it means that financial tools like electronic payment acceptance and cash flow management are now more crucial than ever for long-term success. SMBs are under pressure to find the right solution fast – and must choose from a crowded field of less-than-ideal alternatives.

For financial institutions,?it means that business as usual will no longer cut it. FIs must place a greater focus on solving customer needs and pain points — starting now — if they are to continue to attract a new generation of small business owners.

Here are a few of the big take-aways you'll learn from attending:

? What are the emerging non-bank and newly banked alternatives to your financial institution

? Why small business deposits and relationships are at immediate risk of deposit displacement at financial institutions

? How Autobooks reverses non-consumption and fintech reliance, and over time helps to establish FI primacy

? What the revenue opportunity is for your institution, based on some simple ROI calculations

Reserve your spot now.

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SMBanking /Forward?is Coming in October

Moving small business banking forward today, tomorrow, and beyond.

Have you registered for the upcoming SMBanking/Forward on October 5-6?

When it comes to small business banking, "business as usual" no longer cuts it. Come away with the essential insights and best practices to positively impact your financial institution today — and the vision to transform it for tomorrow.

We are thrilled to announce that the agenda has been updated and is live on the event page. Please head to the following link to?find the agenda.

The agenda includes industry leaders like Ron Shevlin from Cornerstone Advisors, Breaking Banks podcast host Jason Henrichs, and Melissa Eggleston, the Chief Deposit Officer and EVP for nbkc, one of the fastest growing digital-only banks.

This fully virtual event will take place on October 5-6, 2021, at no cost to your or your institution.?

Reserve your spot now.?

Small Business Facts

Montana, Wyoming, and Vermont have the highest rates of small business employment.

Small businesses account for 65.2% of all employment in Montana, followed by 62.6% in Wyoming, and 59.4% in Vermont.

Small health care businesses employ 8.8 million people.

When it comes to high numbers of small business employment by industry, health care and social assistance businesses come out on top, employing more than 8.7 million people.

Small businesses account for 84% of employment in agriculture, forestry, fishing, and hunting.

Almost 84% of workers in the industry of agriculture, forestry, fishing, and hunting are employed by small businesses, making it the sector with the highest rate of small business employment share.

19% of small businesses are family-owned.

Nearly 1 in 5 small businesses in the U.S. are family-owned. This means that two or more members of the same family run the company, and the majority of ownership lies within a family, according to data analyzed by SCORE.

Source:?SBA, SCORE, via?Stacker.com?

Making Progress

"One day I was in the bank making a deposit and the teller mentioned a new service the bank was offering. I could now send electronic invoices and collect customer payments by card directly from my business checking account. All I had to do was log into online banking and sign up.

Now I’m able to send professional invoices to my customers through email and I don’t have to spend time tracking them down. All payments get deposited directly into my business checking account, so no more delays between completing the job and depositing the payment in the bank. If the customer doesn’t pay the full amount, or on time, the system a sends my customer a reminder and will even assess a late fee for me automatically.

Autobooks has made it much easier to manage my customer payments."

-Jerrold Richardson, Equipment Maintenance Service

Something to Share

Want an easy way to share small business updates with your team? Simply copy the section below, paste into an email, and share with your team.

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Did you know?

According to data analyzed from the U.S. Department of Commerce, consumers spent $861.12 billion online with U.S. merchants in 2020. This is a 44% year over year increase, the highest annual U.S. ecommerce growth in two decades — and nearly triple the 15.1% jump in 2019.

Small business owners felt this change too. According to a Mastercard survey of small businesses across North America:

? 76% say the pandemic prompted them to become more digital, with 82% changing how their business sends and receives payments.

? Citing difficulty with cash flow and collecting payments, 50% added a new digital service for collecting funds while one in four transitioned to electronic invoicing.

? With 68% saying cash and check deposits take too long, small businesses decreased their use of cash and checks more than any other payment types during the pandemic.

I read about changing consumer buying patterns and other emerging small business trends in this article,?Why the ability to accept online payments will lock in — and transform — small business relationships at your institution.?I thought you might be interested in reading as well.