How Intuit builds embedded finance around customer benefits

This following is part of a new series we’re running. It’s called the Big Bank Theory, and it’s all about the future of banking. We see three options going forward: in the march towards digital, people will gravitate towards the digital arms of incumbent banks, give their business to new upstart challenger banks, or the biggest opportunity, which is to bank with the brands they love.

Through embedded finance, people are increasingly turning to companies they frequent often -- whether it's a big retail player like Walmart or SMB accounting software like QuickBooks -- to plan, store, and move money around.

The following series includes content from Tearsheet’s Big Bank Theory Conference, held in November 2021.

When I give examples of embedded finance, I typically mention Intuit. What the software company has done -- marrying the tracking and forecasting of money together with the actual movement of money, banking, lending -- points to the power of embedded finance. And it’s still early innings for the power of putting banking, payments, and lending where users need it most. For Intuit, the SMB customer is the core focus.

I chatted with Rania Succar, svp of the QuickBooks money offerings, about how Intuit builds embedded finance around her customers’ benefits. We dive into why that’s so important, with concrete examples of how Intuit determines what to offer and how it prioritizes its pipeline. We also talk about the opportunities to go deeper and broader in serving the SMB with embedded finance.

Here’s my conversation with Rania Succar.

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The following excerpts were edited for clarity.

Intuit's money offerings

I oversee our small business money offerings at Intuit. Basically, that's all the different solutions we've put in place to help small businesses manage their money and their cash flow. So it includes our payments solutions, our lending solutions, our banking solutions, and then cash flow forecasting. At Intuit, our mission is to power prosperity around the world. And we have a very large presence in consumer solutions through TurboTax and through Credit Karma and Mints, and also on the small business side through QuickBooks and now MailChimp.

And so if your mission is to power prosperity around the world, there are just tremendous opportunities to change the game for consumers and open them up to financial freedom, and for small businesses, to increase the success rate of small businesses over five years.

We have been on a transformation journey over the last five years with QuickBooks. Five years ago, QuickBooks was largely thought of as a bookkeeping solution for the backend of small businesses operations. And we have increasingly shifted QuickBooks from that to making it the center of running their business. It has become the most powerful platform small businesses can turn to to do everything from growing customers to managing their money to managing their employees. We have been on that journey.

Embedded finance

There has been insane amount of innovation in the fintech space the last 10 years. Every year, there's been more and more that's come to fruition. But despite all of that innovation, the foundational problems that are challenging small businesses or consumers are still there -- they're still really tough problems left to be solved. So, that is why embedded finance can play a tremendous role in solving them.

64% of small businesses have at least one invoice that is 60 days outstanding. You've spent all of the money to get the project going, and you're still waiting to get paid. It's very hard as a small business to access capital. Still, despite all the innovation we've seen in the industry, 60% of small businesses who want capital can't get what they need in the way that they need it. And then it is extremely hard to manage all of the information. 60% of small businesses spend five hours a week trying to understand their financial position -- five hours a week to be able to make decisions about whether to take on a new job or to hire a new employee.

With embedded finance, we can change all of that. We can take the single platform that small businesses are using to run their money and do more of the work in that platform. So suddenly, you don't have five bank accounts to partition funds in different places and you're not using five payments processors and trying to pull it all into one spreadsheet. The benefit of embedded finance is that we can take these challenges that continue to plague small businesses and make all of their data available to build the best solutions by making it convenient and putting it all in one place.

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4 audacious goals for users

We always focus on solving the biggest customer problems. That's what we are maniacally focused on and we continue to lean in and say, there are massive problems that haven't been solved. So that's where we start. And so what we've done as a team is we've said, what are the biggest, boldest areas that we could go tackle that if we could tackle these, we would unleash small business success? That's what we have identified.

We did a lot of research on small businesses to understand what those are. We've identified financial stability: for a small business to have access to capital when they need it for their business. So this is capital on demand, that within their experience, the system just knows what they can qualify for in capital. Having a system understand what upcoming expenses are going to be, so a business owner can save for them. If you're a small business, what if you could work in a world where there were predictions around those things, and money was being set aside for income or sales taxes or for payroll? Financial stability takes that stress out of running a business.

The next one is effortless clarity. We want to give small business -- and this is a huge one --effortless clarity. It seems like this should have been achieved a long time ago, but we are far from it. Small businesses spend hours in spreadsheets trying to figure out how to make the next decision for their business. What if we could make that effortless with all the information in one place, plus predictions and recommendations.

The third benefit is instant payments. The whole challenge with cash flow starts with money-in problems because it takes too long to get paid. And for centuries, small businesses have had to operate on terms where they get paid based on the terms of the counterparty. What if we could decouple that? We know your credit; we know the credit worthiness of your customer; we know your own risk. We could just make the money available to you when the work is done -- you wouldn't need to stress out about how and when your customer is going to pay you.

And finally, total reliability. Risk management is a big challenge for small businesses but money gets held all the time when it shouldn't be. Or, you try to move money into a bank account, and there are limits that you experience. We believe in a world of total reliability, where the risk systems are so powerful in the background that you are never stopped by one of these things. Your money is always available when you need it. And and the system can always predict what you'll need and is ready there for you.

So that those are the four benefits that we believe are central. If these can be solved, we can increase the success rate of small businesses over five years and unleash the success of small businesses. They're massive goals. They're extremely audacious -- they're multiple year goals.

Judging success

We've got really clear customer benefit metrics in each of these areas and measure them really carefully. So for example, when we talk about instant payments, we're measuring the hours to get paid with every transaction -- from the moment the invoice is created to the moment the money is in the account. We break down every step and go after it to figure out how we can get to essentially instant.

So for financial stability, we look at what share of the QuickBooks population has access to capital on demand, or is actually saving money in the QuickBooks envelope, so that they've got money set aside for big expenses. We've created very rigorous measurement capabilities to ensure that we are creating customer benefit constantly and moving against our bold goals.

Driving prioritization

The conversations we're constantly having are tough prioritization calls. There is so much we want to deliver with such speed. And so we're constantly trading it off. But you know, for example, in our banking world, we built up QuickBooks Cash and Money by QuickBooks -- these are banking solutions that are next generation banking for small businesses with the opportunity to fully reimagine small business banking. Money moves instantly -- automated finance sets savings aside. You've got predictability on what your finances will be. We have been seeing tremendous engagement and energy from customers around our money solutions.

As we think about prioritization, we're constantly thinking about the work we need to do to build a fully fledged bank account so that small businesses can achieve everything that they need with banking -- and also the fun, really exciting, amazing, unique capabilities that only we can bring. The automated money movement and automated savings, for example, ties together our cash flow forecasting where we can say your sales tax is this and we're going to move money in automatically every week or every transaction into that envelope. So we're balancing it: we're doing a combination of the foundational capabilities that make this bank account the primary bank account for small businesses, because we're seeing an increasing appetite and desire for that, while also building out some of these really unique exciting capabilities.

Rolling out money solutions

We have one and a half trillion dollars of invoice value that is created through QuickBooks every year. So we have just scratched the surface of possibilities there in terms of making all those pay-enabled, making those digital -- a huge portion of those are B2B. We all know the opportunity in fintech and finance to take the pain out of B2B transactions, which are still 80% check based. So we are building unique and innovative solutions to take the pain out of that, to make them move away from paper checks to digital payments.

We see similar potential in our payroll solution space. QuickBooks pays the largest number of employees across the country -- one in five employees gets paid through QuickBooks. Think about the opportunity for embedded finance there with the employees in the network. And also working with the employers, as well.

Leveraging data

This is the area we are most excited about because we can provide unbelievable value for small businesses. Let's take instant payments, for example. Think about what's possible here. We are working on an experience where we can fund an invoice instantly when it's created, without any friction, with five clicks -- it's just a mind boggling experience.

Our customers who've been early testers have been blown away by the experience because it's so simple and so unrivaled. And that is because of the data inside the QuickBooks ecosystem. We're able to use this data to create magic with QuickBooks -- not only do we have all of the information about the small business itself to understand its full credit worthiness they come in and they classify and categorize every transaction. But we also understand the counterparties and we know who are they transacting with, their profile, and their likely behaviors. That is just one example of how this data can create magic for small businesses.

Similarly, I've talked a lot about autonomous finance and being able to auto save for small businesses and auto pay a bill based on the right order. That is because small businesses come into the platform, and they put all of their bills in the platform, and they pay them through QuickBooks. We can see everything to understand the full cash flow picture to make those predictions. So that's the power of the data.

Looking ahead

I will say that there is so much to be excited about. I have been watching the space closely over the last five years, and every year the possibilities have increased. But this year, the possibilities have increased in an absolutely exponential way, with consumer and small business shifts, and with technology shifts. I'm excited about revolutionizing the B2B space, moving away from checks. I'm excited about autonomous finance and taking the cognitive load out of the work and optimizing decisions, possibilities, and opportunities.

I'm also very excited about all the possibilities that come with crypto for small businesses in terms of faster money movement, lower cost, money movement, better access to lending. There are just so many areas we're working on and excited about. I think the momentum will continue to increase and accelerate.