The past few years have cemented the role of digitization in the survival of businesses. A review titled COVID-19 Crisis and SMEs Responses highlights that the health crisis has caused 43% of small and medium enterprises (SMEs) in the United States to temporarily close their physical stores. This big change has pushed small and medium-sized businesses (SMBs) to use digital tools to interact with clients, report their sales, and change their operations.

SMBs are changing to better support and serve their clients. So why aren’t financial service providers doing the same for their SMB customers? Though the health crisis is getting under control, the business banking industry continues to fully adopt digitization to service businesses, but not well enough.

This is not a new story – “Banks Must Adopt APIs for Business Lending or the Fintechs Will Win” is a piece that The Financial Brand published in 2020. This article highlights how during the first round of PPP (Paycheck Protection Program), banks and credit unions without APIs were unable to collect information fast enough to support new businesses. These businesses turned to fintech lenders, such as Paypal and Square. The loss for these banks and credit unions became fintechs’ profits, as Square gained 60% more customers and processed $820 million across 76,000 PPP loans.

And yet – with all this change, business loan applicants are still disappointed with the lack of digitalization in the industry. Smarter Loans’ 2022 study found that 81% of business loan applicants feel that there is room for improvement in the loan process. Forbes’ Ron Shevlin highlighted the solution to improving business lending with one of the hottest banking technologies – digital loan origination.

Leverage Digitization in Making Data-driven Decisions

Every loan request starts with a business needing capital. The capital provider can be a fintech,  private lender, or financial institution, like a bank or credit union. The next step is always the same – if a business requires money, the financial service provider needs their financial data to make sure the business will repay the loan. There are two ways to do this:

Manually gathering and calculating information  – this is the slow way.

Digitally get the information in real-time – this is the fast way.

The best-in-breed technologies will not only gather this information but will manage and analyze it. This is crucial for the success of you and your SMB customers. With access to SMBs’ financial data, like accounting, commerce, payroll, and tax data, you can make data-driven decisions.

Cloud Accounting

Cloud accounting is online cloud-based software that allows businesses to digitize and store their accounting in an encrypted cloud system. With cloud accounting, businesses scan and digitally store documents such as invoices, bills, tax forms, bank statements, and more. Software like Quickbooks, Xero, and Sage, help businesses track financial data such as transactions and expenses in real-time.

Cloud Commerce

Cloud commerce is online cloud-based software that tracks business transactions, revenue, chargebacks, sales, and more. It also helps businesses prepare their state-level and local sales taxes calculations. Software like Shopify, Square, Amazon, and Stripe allow businesses to easily track their financial data in a cloud-based system. They are easier to navigate and record data from than manually created spreadsheets and documents.

These cloud-based systems, accounting, and commerce can all be accessed through an API.

To make sense of this financial data, it needs to be analyzed. Instead of manually entering information into spreadsheets to calculate various ratios, turn that financial data into meaningful insights. These insights can assist with real-time business financial insights, cash flow forecasting, and an overall view of business health. Allowing financial institutions to make the most informed decisions about business customers based on various real-time business insights.

Better Serve SMBs Through Digitalization

Currently, there is a disconnect between what an SMB needs and what a business lender can provide. SMBs owners are expected to go to a business lender and tell them the product they require. However, most SMB owners do not know whether they need a working capital loan, operating loan, term loan, or business credit card.

Instead of telling business owners what products they need, many business lenders have digital applications for business owners to ‘find’ the products they’re eligible for.

However, after completing these applications, applicants do not find what product(s) they are eligible for. Instead, they are told to contact a representative. Business customers become dissatisfied and frustrated since they spent time answering questions to not receive any service or straightforward answers.

Digitization for Streamlined Business Lending

Every loan request is followed by a series of steps. After a business owner completes a loan application, they have to wait for a response from the business lender. On the other hand, the business lender needs to evaluate the application to determine if the prospective loan applicant is eligible for what they applied for. Sometimes the business lenders need to reach out to the prospective applicant and request more information. Now the lending process is stalled until the business can provide all the needed documentation via email, fax, or mail. Forgo this timely process with digitalization.

About Boss Insights

Boss Insights is an award-winning leader in open banking, linking fintech and financial institutions to their small and medium-sized business clients’ financial accounting, commerce/sales, banking, payroll, and tax data in minutes. In an industry that needs speed and access to real-time data, Boss Insights empowers fintech, private lenders, and financial institutions to serve their business customers. In addition to data from the likes of QuickBooks, Xero, Stripe, Square, Shopify, Amazon, and more, Boss Insights provides portals to originate, decision, and service fintech and financial institutions.   For more information, visit