Today’s B2B fintech is all about data. Whether you offer loans, bank accounts, or some other type of financial service, the key is getting businesses to give you their data. That’s why we’ve seen business software platforms offer free versions — they know the value is in the data, not a monthly subscription fee.
This is so true in accounting and ERP systems. If a company uses them for payments and sales, ERPs have richer information than any bank could wish they could get their hands on. As they sit at the financial heart of an organization, they’re ripe to connect to banking and payment rails, helping to automate and expedite all kinds of financial services.
That’s Lisa Shield’s view, too. The founder and CEO of FI.SPAN, Lisa’s firm connects banks and businesses through their ERP systems. This isn’t Lisa’s first rodeo — she founded Hyperwallet, which in 2000 was one of the first companies focused on solving mass payouts. That company is now part of PayPal. Lisa and I discuss the convergence of accounting and banking and why she believes so strongly that ERPs are the banking channel of the future.
Entering fintech with Hyperwallet
I was in hard engineering. Around 2000, I was really enamored with the internet and wanted to work on a product where databases met the internet. That took me out of the aviation field and into payments processing for an online gambling company. I didn’t know anything about payments or financial services. It was a mid-career domain switch for me. I built and ran the financial side of that organization, collecting from credit cards and paying out on to credit cards.
It was my first foray into payments. As soon as you go payments, you’ll never go back. As you peel back the onion of how the networks and value chains work, you can’t believe that’s how it works and start thinking about how to make it better. Therein was born the idea of my first fintech startup, Hyperwallet, which was founded in 2000. The goal was to bring non-card payments, like credit push, good funds, secure, anonymous payments, on to the internet. We were one of many companies that has the same idea. I liken it now to the fascination and inexorable pull of the blockchain for the next generation of young engineers.
Hyperwallet was going to be a direct ecommerce payments company. We struggled with financing for a few years, but pointed the ship at large US multinational corporates. We had this full white labeled system that did ACH and card disbursements — mass payouts — in 80 countries around the world. We liked to say that for a $300 payment, SWIFT isn’t a good solution. The cost of the transaction to the value of the principal is outrageous. Hyperwallet could move money anywhere in the world for $3. We serviced two-sided US marketplaces. AirBNB and Uber collect funds from consumers on credit cards, but they need to make payouts in many countries. I ran that company for 15 year and it was recently acquired by PayPal.
The truth about corporate financial services
Hyperwallet notionally competed against banks for corporate services. In truth, we only really competed against checks. Banks didn’t have solutions for corporates. We would engage with big corporates and after a few months, I’d go meet with my customers as you do to see how the business is going. The conversation became the epiphany and genesis of what is now FI.SPAN.
These companies said that we solved the number one problem on their whiteboard for the treasury and finance department. How do I pay my 60,000 distributors across 18 countries every month? Now, I’m looking at problem two, three, and four. Lisa, what can you do for me in cash management? Domestic B2B vendor payments? Do you have a corporate foreign exchange management service?
I was taken aback because these are highly-banked, publicly traded global organizations, yet they were inviting a small startup to provide what I expected to be core products and services provided by banks. I came to realize that it wasn’t the products and services at the banks that were undermeeting the needs of these businesses. It was the way they interacted with the core platforms at the business. They didn’t. The state of data exchange between ERPs and the systems of record at the bank was really old school. Really manual reconciliations.
Why focus on accounting and ERP systems for connectivity to banks?
ERPs are the core systems of record for businesses. A business may have multiple banking and financial relationships, but it has one ERP, one system of truth for accounting, payables, receivables, cash forecasting. That ERP system is the fulcrum and financial center of a business. I believe as banks think about open banking and platformification, the primary financial service consumption channels for businesses won’t be online banking, mobile banking, chatbots or Alexa. For businesses, it will be their accounting and ERP applications. Banks need to be present in the NetSuite app store.
Evolving definition of a bank and banking relationships
What’s cool is that banks won’t need to seed their brand presence or promise. Especially with modern cloud ERPs, they have very rich development environments. What FI.SPAN does is bring a bank’s treasury experience right within the single unified login environment. A bank’s relationship with a client in the future doesn’t need to be invisible. Some banks struggle with the idea of APIs, feeling that someone else controls the experience. ERPs also have APIs. It’s exciting that banks can be present from a user experience in new channels like this.
More importantly, the future relationship between a bank and its customers involves real-time, contextual, bidirectional data flow. Sorry for the buzzwords, but one of the things the future holds, when a bank is embedded in its customer ERP system, if you’ve earned the permission, you have real-time visibility into a customer’s open receivables. That’s a feature we offer in our service.