The 2023 SIBOS conference was chock-full of sessions across all the major issues in banking at the moment. Evolving international messaging standard ISO20022’s angles and options were covered in depth, in fact, it was discussed during seven separate sessions on the first day alone! Artificial Intelligence (AI) and its applications to assist general banking, fraud prevention, and know-your-customer (KYC) and anti-money laundering (AML) operations wasn’t far behind. Sustainability and ESG rounded out the list of top topics for the annual gathering of global bankers under the aegis of SWIFT, the worldwide financial message and transaction consortium

Finextra has shared many insights from SIBOS sessions and conducted interviews with experts at several leading banking and fintech firms on these topics and more. To shift the focus slightly toward industry issues of particular interest to business owners and the banks serving smaller companies and organisations (which account for roughly 70 % of all jobs worldwide according to the World Economic Forum), we visited with the founder and CEO of a company who also knows a lot about current industry innovations and their features and benefits.

Mark Hartley, founder and CEO of Bankifi, pointed out that while these subjects may be important to megabanks and their multinational customers, they’re not as important to his smaller financial institution customers and their small to medium-sized business (SMB) customers in turn. What this group cares about most, he said, is “getting paid.”

“Smaller businesses don’t care about ISO. They don't care about open banking. What they do care about is what that gives you”, says Mark Hartley.

Hartley has been in the business of selling technology to financial institutions “for 30-odd years.” After leading international roles at FIS and other companies, he founded Bankifi in 2017. The Manchester, England-headquartered company is described in a Celent report as “striving to make banks the destination for small businesses for all their financial management needs.”

It’s not about products, Hartley asserts. Smaller companies need sensible solutions. “They’ll ask: ‘Can you give me a single interface that helps me manage my business, from the issuance of a purchase order that spawns a payment that goes to my financial admin on the payables and receivables side (AP and AR), that's all they're interested in. Can you make my life more straightforward?”

“Banks tend to not really understand the needs of a small business very well. Banks think very much around product and not around workflows. When we make a payment as a small business, there are all sorts of other things that go round, and invoice and accounting entry […] this world is something that banks don't appreciate.”

Hartley asserts that small businesses have the same requirements as a large corporate, “but they don't have armies of people in payables and receivables doing those things.”

Noting that neither typical retail banking applications nor complex treasury management systems serve small businesses and their daily workflow orientation well, Hartley says that small business owners are often left out in the cold. “There's nothing that's dedicated to the backbone of the economy, which are those small businesses that have you know, zero to 20 employees.”

That’s where Bankifi fits in. But Hartley clearly points out that they are not a ‘disruptor.’ “We're a bank- friendly organisation. We distribute through our financial institution partners.” What their cloud-based software brings to their bank clients and the bank’s customers, by extension, is a solution to some particularly vexing challenges: having no time (or extra people), and getting paid by their customers on time. “On average it takes small businesses between 55 and 75 days to get paid on a 30-day invoice,” and that can kill that business, or at least its profitability, if it happens regularly, he says.

Using Bankifi’s automated payments platform, and the data they gather and build on businesses up and down the supply chain in the countries where they operate (UK, US, Belgium, and Australia) and across the globe, “71% of the invoices we issue on behalf of our customers are paid within two days. Even the ones that are due in 30 days, they still get paid often 28 days before they're due. So, what we're really doing is helping those small businesses with their working capital, and ironically, that also helps the bank with deposits of course, because the sooner that money comes in, the better it is (for the banks). But for the small business in particular, getting paid on time (and thus reducing their days sales outstanding -or DSO- the measure of the average number of days that it takes a company to collect payment for a sale) is hugely important,” Hartley explains.

Besides providing full multibank payments including AP and AR functionality and API integration with popular accounting packages for its customers’ small business users, Bankifi takes a different approach vs. that of most other vendors in the SME with its emphasis on supporting the way their SMB customers actually work, and using the data they provide that customer’s bank can help improve visibility into cash flows. This aids the bank’s insights into the customer’s creditworthiness, and that can help bolster the bank’s appetite to extend working capital lines to the customer. But what about real-time payments (RTP) and other recent innovations? Hartley says they support it and its use is growing, especially request-to-pay functionality. Also, the Bankifi system allows the small business client to choose the channel (including SMS text and QR code) and payment method of choice, whether electronic transfer, card, or instant payment.

Asked why a smaller institution, like those in their target market, might choose Bankifi over another vendor, or building their own systems in-house, Hartley explains: “Do you really think you can build it better, faster, quicker than we can when we're (small business) specialists, and we don't have all of that inertia and friction and layers of bureaucracy that you guys have? The reality is, just give your customers what they need as quickly and as fast as you can. We specialise in what we do. The bank doesn't specialise in what we're doing. So why would you think that you can build it better, faster, cheaper than the experts can?”