As head of Wise Business products, Clara Nobre manages Wise’s special products for small and medium-sized businesses. Before joining Wise, Clara worked at Vodafone, Hive and Portugal Telecom. Wise Business allows users to pay employees, receive salaries and manage their cash flow abroad. Today, Wise moves £6 billion a month and has 3,000 employees worldwide. From digital payments to win-win lending, we look at the latest trends in small business banking and how it’s impacting the space.
Do small businesses have special banking needs? And if so, how does fintech meet these needs?
So. A small business does not have the resources of a large business – neither personnel nor money. For this reason, they need banking services that are easy to use, efficient and affordable. Unfortunately, what banks offer is usually bureaucratic, slow and expensive. Fintech can help. Fintech companies can specialize and bring their innovative culture to small business banking.
Take Wise Business. We know how broken existing international banking services are, so we make ours as fast, transparent and accessible as possible. We also focus on real business bugbears. We know small businesses hate having to open a local bank account when they enter a new market, so we provide them with local account details that take the hassle out of it.
How can an SME be sure they are choosing the right bank to manage their business needs? What to pay attention to when choosing a bank?
It is clear that the business is careful with its money. Fintech is a young business, their brands are not that well known, while banks have decades, centuries of heritage, even if their services are lacking. This prompts caution: no one has been fired for buying IBM, nor do I doubt anyone has been fired for choosing a high street bank.
To overcome this, businesses need to figure out what their specific banking needs are. Fintechs are specialized, so a business can find one that really fits its specific problems. In addition, there are other routine checks they can do, such as checking NPS, talking to other customers, etc.
Name the top three trends in SMB banking that are disrupting the space
Disruption of international banking. Business is becoming more and more international, so the importance of international banking services is growing. But there is a lack of bank services. They are slow, expensive, clogged with bureaucracy.
To find out more about the issue, we recently commissioned YouGov to conduct a survey of 5,000 small and medium-sized businesses around the world. The results showed that among companies that were put off going abroad, the most cited reason for holding back was problems with international banking, ranked higher than tariffs, regulation or access to finance. Among companies that already operate abroad, international banking services are considered the main factor that complicates doing business. It’s time for a change — and at Wise Business, we’re trying to do something better.
Established banks create new brands for banking services for small and medium-sized businesses. Banks know they lack services for small and medium-sized businesses, so they’re actually starting over. We’re seeing a number of leading banks launch brand new brands for SME banking, brands you never knew belonged to more established banks. This is a very interesting trend and it could really work if they manage to combine fintech culture with the scale of a bank.
[Another critical element is] Increasing trust and use of fintech by SMEs. The study also found that of those SMEs operating abroad, 42% now use fintech or digital banking. This number will only increase as fintech companies become more prominent and SMEs trust them with more of their banking services.
How do you see the future of small business banking?
If banks don’t improve their services – either by building their own or by partnering with APIs and third-party services – I think they’ll lose a lot of small business customers. We are already seeing a huge number of brilliant fintech companies offering great products and services. They will become more known and used, and banks will lose customers.