Listen: How a neobank keeps SMBs afloat

Small- and medium-sized businesses (SMBs) must navigate several challenges during their first years in business. Understanding the needs of SMBs is critical, as more than 50% of small businesses fold within the first five years, according to the Bureau of Labor Statistics . Banks that create strategies to help support SMBs can become an integral part of their growth and help to sustain them during uncertain economic conditions, Eytan Bensoussan, founder and chief executive at neobank NorthOne , tells Bank Automation News in this episode of “The Buzz” podcast. “I think the way that we see the impact of that is when we survey our customers, when we're able to kind of connect the dots between what is happening transactionally in your bank, and then in cases of creating a [profit-and-loss model] and understanding expenses,” Bensoussan says. Listen as Bensoussan discusses the challenges faced by many SMBs and how they can use data to discover new business opportunities. Bank Automation Summit US 2023, taking place March 2-3 in Charlotte, is a crucial event on automation and automation technology in banking. <a class="fui-Link ___m14voj0 f3rmtva f1ern45e f1deefiw f1n71otn f1q5o8ev f1h8hb77 f1vxd6vx f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f9n3di6 f1ids18y fygtlnl f1deo86v f12x56k7 f1iescvh ftqa4ok f50u1b5 fs3pq8b f1hghxdh f1tymzes f1x7u7e9 f1cmlufx f10aw75t fsle3fq" tabindex="-1" title="https://bankautomationsummit.com/?utm_source=Editorial&utm_medium=BAN_Site&utm_campaign=Editorial&utm_content=Home" href="https://bankautomationsummit.com/?utm_source=Editorial&utm_medium=BAN_Site&utm_campaign=Editorial&utm_content=Home&__hstc=41615677.3fe700e68891f0bfd867036c89aa2d86.1650376353803.1671122646995.1671133763956.637&__hssc=41615677.8.1671133763956&__hsfp=2478973190" target="_blank" rel="noopener noreferrer" aria-label="Link Learn more">Learn more and <a class="fui-Link ___m14voj0 f3rmtva f1ern45e f1deefiw f1n71otn f1q5o8ev f1h8hb77 f1vxd6vx f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f9n3di6 f1ids18y fygtlnl f1deo86v f12x56k7 f1iescvh ftqa4ok f50u1b5 fs3pq8b f1hghxdh f1tymzes f1x7u7e9 f1cmlufx f10aw75t fsle3fq" tabindex="-1" title="https://bankautomationsummit.com/register/?utm_source=Editorial&utm_medium=BAN_Site&utm_campaign=Editorial&utm_content=Register" href="https://bankautomationsummit.com/register/?utm_source=Editorial&utm_medium=BAN_Site&utm_campaign=Editorial&utm_content=Register&__hstc=41615677.3fe700e68891f0bfd867036c89aa2d86.1650376353803.1671122646995.1671133763956.637&__hssc=41615677.8.1671133763956&__hsfp=2478973190" target="_blank" rel="noopener noreferrer" aria-label="Link register for Bank Automation Summit US 2023">register for Bank Automation Summit US 2023 . Subscribe to The Buzz Podcast on iTunes , Spotify , Google podcasts , or download the episode . The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Brian Stone 0:03 Hello, and welcome to the buzz of bank automation news podcast. My name is Brian stone, and I'm the Associate Editor at Bank automation news. Joining me today is Eytan Bensoussan, Founder and Chief Executive Officer at neobank NorthOne a time discuss the ways NorthOne is using FinTech to help small businesses, what he's learned from talking to business owners, and the most challenging part of starting a new bank.Eytan Bensoussan 0:30 I mean, you have the the classical challenges of launching anything. But then you have the added the added layers of you know, an intricate partnership relationship, no matter what direction you're thinking about, there's always multiple layers of very, very important partners that are, they're not commodities, right, these are real long term relationships, that will impact your business, no matter what you can't just like switch them very easily, then you have the added layer of the kind of service that you're offering financial services, you know, is something that is viscerally you know, important to folks that that creates a lot of anxiety when it doesn't go right. And the other part is that there is a specific regulatory environment that you jump into. And so I think, you know, the, the experience of it is that it's, you're probably not grasping all the different layers at once. But as they start getting layered into you, you start realizing that there is there's a lot of balls in the air, and you have to be really meticulous, and making sure that you're juggling them all very, very effectively. Brian Stone 1:31 What does North one, as a neobank specifically do to help small and medium businesses succeed? Eytan Bensoussan 1:38 It's our everything. You know, the mission behind North one North one is a, you know, Challenger bank, or neobank, for small businesses. Yet, our mission really doesn't even have banking or technology in it. You know, even though that's what we do every single day, our goal is to actually build a finance department inside of every small business in America. And the thesis underpinning that is the best place through which to do that is actually the bank account, starting that bank, and as a foundation, you can actually build all the scaffolding of those other pieces around it. And we use, you know, cutting edge technology and and, you know, regulated financial services through our partners to offer this blended experience to the customer, where they are getting the savviness, the risk management, the insight of the finance department, you know, through their very, you know, bank partner or bank provider. And I think the, the, the way that we see the impact of that is when we survey our customers, when we're able to kind of connect the dots between what is happening transactionally in your bank, and and then all of that kind of back office in cases of creating a p&l, understanding your expenses, your etc. You know, 89% of them tell us that they are in better financial health after using Northwind than they were before that 82% of them tell us that they're spending less time on the very same activities of financial management after using Northwind than before. Some of them we know they fail less, less often. So these this is how we translate all of this this wave of FinTech and technology into real life impact for the small businesses. Brian Stone 3:09 What specific challenges do you see for small to medium businesses versus say, like their larger counterparts. Eytan Bensoussan 3:16 And, you know, there's challenges up and down the spectrum, I think they just evolved dramatically. Whereas in large counterparts, you have dedicated teams of people that are there to wrestle with the complexity of the business, and it creates its own set of challenges for these for these businesses. And I'm talking about businesses that are up to maybe 2030 employees. So meaningful, but definitely not a fortune 5000 company, the the complexity of making sure that the fine that the banking and the finance, the finances of the company run properly, is the first piece which is its own art and science of getting that right. But the other part is that they're almost certainly under resourced. They don't have a specialized skill sets with a deep bench of people who can attack each part of that problem, a lot of it is kind of a self serve DIY, where you kind of self assemble the processes to get the thing to work. And sometimes it's needed of duct tape and, you know, good wishes. And I think that's that's actually the real challenge that they face, which is so much of this is kind of created for a moment in time, and then the processes break very often. And it creates a lot of existential instability when those when those things break down at the wrong time. Brian Stone 4:27 From the banking side from North one side, what is the most challenging part of supporting these small to medium businesses? Eytan Bensoussan 4:34 Yeah. I think, you know, I say there's going to be three challenges that that really express themselves very often. I think the first one is trust. You know, I think we it's so easy to overlook it and say, oh, yeah, of course, of course. But really, it's not you're asking a businesses that has been with 200 yield banks, you know, for five or six years they've been with them to then move everything and almost like a source of open heart surgery and say I'm going to try you was my bank and impossibly making my primary bank and that's, that's a trust, it's an emotional journey that you bring them on. That's the first big one. The second, you know, the second really big thing that we wrestle with is the balance between simplicity and functionality. You know, it's so easy to over engineer and to give every possible option. But the thing that these these businesses crave is someone to remove complexity from their life, and make it just really easy to get from point A to B, and we spend a lot of time wrestling with what is the cleanest, easiest way to accomplish a task, even if it sometimes means that you can't have 1000 dials, like a cockpit, you just want you know, like a gear and a car, say I want to go drive to reverse to neutral. And that's kind of where you go. And I think the last one is to actually see the shifting landscape of where you fit in their ecosystem, you know, they're using other tools, they're thinking about other things. And you have to be thinking about how you always will plug in to be the most valuable piece of the puzzle for them with everything else that's changing in their businesses. And it's kind of like, where's the puck going, you have to figure out where to how to get there and, and know, what's the next most important thing to build. And especially hard when you're when you're as a as a as an early stage company, you don't have infinite resources, right. So you really have to make a number of big bets and get them right to actually exist for much longer Brian Stone 6:19 power, small and medium business using FinTech and new tools and things like that in order to kind of help stay above water. Eytan Bensoussan 6:28 And that's actually really germane. Given the kind of looming recession, the dark clouds overhead, I think there's, I've noticed a shift actually. So while businesses used to really be in a kind of an explicit day at the mall, like, Oh, I'll try this on, see how it feels, there's a lot of like, experimentation that we saw on the path is really shifted to, if it doesn't save me money, if it doesn't save me time, I just don't need it anymore. And so there's kind of this distillation to real tangible sources of value. And that's actually one of the most important pieces, you know, for them when, when it comes to their shopping journey. And I think noticing that has been one of the one of the most massive changes we've seen in shopping behavior, and just user behavior over the course of the last, you know, three, four years that we've been in business Brian Stone 7:16 with you talking to, let's say, entrepreneurs, business owners, what is something that you have learned, you know, whether about their business are the way that North one will conduct business with them that you may not have immediately thought about before Eytan Bensoussan 7:31 that broken can be good. And what I mean by that is, you'll talk to go talk to one of our customers, and you look at the way that they're running their finance department like this is objectively so so much more painful than it has to be. And you can and they'll, they'll say, Yes, I know it is. But as soon as there is a process that just has the dust has settled, it seems to work it does, it delivers what needs to deliver, even if it's broken and painful, Better that than to have to blow it up and figure things out again. And I think that was one of the most important learnings we had, we thought that there'll be a lot more hey, this is going to be more efficient. Let me reopen it like solve for this other toolkits, other process that will make them we actually realize how humble we needed to be in the face of like, if it's not broken, don't fix it. Right. And that that is so true with these businesses, because what's what their mind is like, if that's settled, I can actually tackle the big things that I'm that are really keeping up. And I don't want to create like, unforced errors in my life as a result of it. But I think one of the things that we're, you know, it's kind of a continuation of, you know, what our businesses looking for right now how they use FinTech, I think, one one really interesting spike of of information that's come through is just the need for speed. You know, businesses are starting to play out the next one, two quarters, and they're realizing that the balances they keep in their bank account may just have to shrink a little. Because, you know, just the costs are going up and revenues aren't going up as quickly. And so as a result of that one of the levers that I'd say five years ago wasn't really on their radar to better manage cash is actually the ability to almost pay instantly pay same day, that allows them to not have to, you know, exit a balance for three, four or five days because of transit times. And that little pieces becomes such a real, just almost strong source of demand that it's almost impossible not to hear them talking about you know how they can get the money moving quicker so that they have to do less provisioning for transit times and wait times and delivery times of their of their payments. Brian Stone 9:32 You've been listening to the buzz, a bank automation news podcast, please follow us on Twitter and LinkedIn. And as a reminder, you can rate this podcast on your platform of choice, be sure to visit us at Bank automation news.com

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BankUnited CTO joins Bank Automation Summit US 2023

By the Numbers: FIs to invest in digital, customer engagement in 2023

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