We spoke to Mark Hartley, Founding Partner of BankiFi, to find out more about this exciting fintech.
Who does BankiFi support?
There are 5.5 million sole traders and micro businesses in the UK – organisations with 0-10 employees. That accounts for 99% of all private companies and 60% of the total workforce.
This is the lifeblood of the British economy and they have been hit hardest during the pandemic. As the pressure on this sector increases, so does the need for digital solution that can help individuals and organisations get paid, and make their lives easier by reducing unnecessary admin.
How would you describe the functionality that BankiFi offers?
BankiFi’s roots were planted deep in the 90s. Back then I could never understand why accounting software was separate from your cash management software – surely, the best option is to embed an accounting package into a bank account so that the accounting functionality can be seamlessly driven from the banking data.
So we built BankiFi to collapse accounting and banking into a single service for those that need it most – bank accounting from gig to big.
Ultimately, the sole trader or micro business doesn’t want to have to work on the evenings, in the mornings or on weekends to put all their transactions into Quickbooks or Xero. They want to be able to create an invoice on their phone and instantly send it to the recipient. When the payment comes through they want a solution that will instantly match and reconcile it in the background. And if they haven’t been paid, they want a solution that will automatically send a reminder via text, WhatsApp or email to chase down the payment.
So we’ve developed an accounting package that a bank can label as their own. We’ve built relationships with ethical finance providers to provide start up loans and enterprise loans that are absolutely ethical. We’ve developed a front-end interface that a bank can consume and offer to customers, and we’ve built a Request to Pay solution.
We wanted to give the banks more and more capability to service the SME customer rather than it just being the bastion of accounting packages. So now, through simple API integration a bank can spin up an end to end packaged service for sole traders and micro businesses.
What’s the biggest pain point that BankiFi solves?
Prior to Covid the average invoicing cycle in the UK for small businesses was payment terms of 30 days, but most businesses wouldn’t get paid for 56 days. That’s now increased to 71 days.
Collections has long been a problem, and it’s only been worsened by Covid. If you add to that the amount of debt that has been taken on through CIBILs, BIBILs, overdrafts and credit cards, we now have this burgeoning problem where small businesses are getting paid late and they have far more debt sitting on the balance sheet.
With the BankiFi solution, a small business owner can register to our Request to Pay service, link the bank account that they want to receive payment into and they can send out requests to their customers to get paid on or before the due date.
That can be delivered through email, SMS, WhatsApp, or even via QR code so it can be done in person with NFC. This removes the need for a payment card, which is by far the most expensive form of payment for a small business.
Although the Bankifi Request to Pay service is going to be launched with one high street bank, it can be used by anyone. In other words, they don’t have to have a banking relationship with this bank to use the service. They can use any personal current account or business current account in the UK. And, more importantly, the payer doesn’t have to register for the service at all – they don’t even have to have an app. The receive the request, click on a link to view the invoice and then will be redirected to their bank account to authorise the payment.
It’s an open loop system which can be delivered over a number of platforms and the payment can be made using Open Banking.
What’s the impact of the BankiFi solution for sole traders and micro businesses?
We’d like to shift the conversation away from Open Banking and Request to Pay – we should talk in terms of benefits and value to users.
I want to talk about reducing late payments. I want to talk about automating collections. I want to talk about reducing fees paid to an account. I want to talk about helping a micro business to understand their cash position quickly and accurately. And I want to talk about helping you submit your tax return.
That’s what the BankiFi solution does in real terms. We help businesses get paid more easily and reduce the admin burden so they can focus on selling their products or services.
Final thoughts:
By and large, the Open Finance rhetoric has focused on consumers – retail customers – rather than SMEs; the FCA call for input in 2020 made only passing reference to SME use cases.
But the potential opportunity for SMEs is huge – from reducing admin, lowering costs and improving the speed of payments.
And there are parallels to be drawn between micro businesses and consumers – as a sole trader my personal financial life will be intertwined with my business financial life. Open Finance has the power to bring these worlds together to support an individual and their business, at the same time.
This isn’t a conversation or a use case that we’ve seen anyone address to date, but with a market size of 4.5 million, you’d have thought there is a value in at least a little exploration.
