In the US Fintech landscape, an enormous opportunity looms: a market of 30 million small and medium-sized businesses (SMBs) remains relatively underbanked. While they have access to basic business checking accounts and other primary banking services, US SMBs generally lack access to the more mature and sophisticated financial services that both retail consumers and large-scale enterprises enjoy. Fintech founder and SteadiPay CEO Anthony Strike explains the struggles of operating in this relatively new space:
“As a Fintech, I’m dependent on my Banking-as-a-Service platform and my banking relationships, and I can only innovate to the extent that they innovate. I can only bring products to market that they have capabilities for.”
Regulatory complexity and the broad spectrum of banking needs that SMB customers have further contributed to an environment where innovation happens relatively slowly. Yet despite these challenges, the first market-fit Fintech products are starting to emerge.
In 2018, SteadiPay was among the first financial service providers to venture into this underserved market. The company began by offering simple and straightforward financial products and services to make cash flow management and operating a small business more efficient for business owners. Their initial offering — the Credit Optimiser — was a simple yet robust tool to help small business owners automate the repayment process for their credit card balance. According to Anthony:
“Managing cash, the timing of cash, and your card limit were just these complex, annoying things that small business owners didn’t want to have to manage manually. And it was our first little clue into just how many manual processes and legacy technologies and friction points a small business owner has to deal with in just managing finances.”
For a small business, one of the benefits of using a business credit card is access to cashback offers, reward points and other perks. Credit cards also bring the risk of high interest payments and sometimes unexpected costs at the end of the month. To help solve this problem, SteadiPay designed its Credit Optimizer product. By allowing a business owner to connect both their credit card and bank accounts to the Credit Optimizer, the app automatically tracks spending behavior on the credit cards, and automatically pays off the outstanding credit from their bank account to avoid high fees and unnecessary expenses, while still allowing users to reap the benefits of paying with their credit card.
Following the success of the Credit Optimizer, SteadiPay expanded its SMB product offering in 2019 with a suite of tools to make cash management as easy as possible.
To increase cash management optimization beyond just credit card spending, the company identified a second opportunity to optimize under-utilized cash reserves. This would become the Cash Optimiser product. On the ‘Banking on Air’ podcast, CEO Anthony explains the concept:
“We wanted to launch a high-yield, bank-agnostic sweep account for small businesses. We wanted to let small businesses put any cash they had on hand to good use. Even for a short amount of time, and even for a small amount of dollars… and get the best rate on the market.”
SMB business owners simply connect their business bank account to SteadiPay, and the service automatically moves unused cash reserves into a high-yield savings account, then pulls it back to the checking account whenever the cash is needed.
In expanding their product offering with extremely simple value propositions to small business owners, SteadiPay is a frontrunner in offering modern Fintech solutions to this traditionally underserved, but vitally important, market segment. The company continuously strives to make cash management easier for busy entrepreneurs.
From an engineering standpoint, one of the key components of the Cash Optimizer product was an integration with the Yodlee API, to enable access to a user’s bank balance and transaction history. Early in the development lifecycle, SteadiPay’s outsourced development team ran into persistent issues with this API integration. SteadiPay CEO Anthony Strike then decided to bring Vacuumlabs developers onboard to resolve the technical pain points, bring the Yodlee integration online and build the whole MVP from scratch in only 3 months.
Impressed with the ease of working with both the Vacuumlabs teams and the quality of engineering, all engineering work was moved over to Vacuumlabs. In the months that followed, Vacuumlabs’ team of five developers worked to build out the full product offering — ranging from product design and usability to back-end engineering, testing and release.
Building on the uptake and success of the Cash Optimizer, SteadiPay now offers a full cash management dashboard — the cockpit view that a business needs to see what is happening inside the business, and spot areas that require attention or could be optimized. Anthony explains:
“Cashflow is the lifeblood of a small business and understanding how many dollars are moving in and out of your business is the most important thing you need to do as a small business owner. But it’s also not remotely why you got into business, and it’s also a big manual chore.”
Using the dashboard a business owner will be able to view historic cash balances, track where money is being spent, and based on algorithmic intelligence, receive predictive data and forecasts on future cash balances.
“We did more than 300 customer interviews and talked to more than a hundred accountants who support small businesses as we were researching how to make this product work” SteadiPay CEO Anthony explains, “And one of the things we came away with was that it’s not enough to just give the small business a forecast or data. There are a lot of forecasting tools in the market. But you don’t just dump a forecast on them and say “Okay, here’s your data, go figure out what you need to do.” — they need help. They need to understand what the right things to do are. So that is exactly what we’re building out now at SteadiPay.”
In expanding its integrated product line-up, SteadiPay leverages its technical partnership with Vacuumlabs to rapidly deploy solution upgrades to its growing base of small business customers.
Their pragmatic and customer-centric approach demonstrates that it is possible to offer compelling Fintech solutions to the US SMB market, even if much of the needed BaaS infrastructure is still in its infancy.