Financial services lack technology-enhanced services for small businesses

By Puja Sharma

A whitepaper from ForwardAI calls attention to widening customer expectations, advantages of providing cash-flow forecasting, and funding advisory services to support businesses’ financial health

A FinTech aggregator of accounting & business data and analysis, ForwardAI, released a whitepaper titled “Rising small business expectations and the evolving roles of financial service providers,” which focuses on modern, technology-enabled services that accountants, banking and financial service providers offer to their clients across North America.

As consumers have started to enjoy better financial services from accelerated digitisation, the report finds that business owners are starting to expect the same full suite of “anytime-anywhere” services from their service providers and financial institutions. Yet, over half of all surveyed companies provide neither funding advisory nor cash flow forecasting services, which will be essential to attract and retain SMB customers – and to compete with fintech firms that do.

Why are Tech-enabled services important for SMBs?

Tech-enabled services help small businesses in terms of scalability, high operating leverage, recurring revenue model, and expansion opportunities. Tech-enabled services are faster and more cost-effective, it makes internet accessibility quicker and brings down the overall operational cost.

An organization’s products are its technology and software-enabled services (SES). As a result, the company generates revenue and valuable outcomes for customers. Technology-enabled services businesses offer a variety of services. The three services are platform as a service (PaaS), infrastructure as a service (IaaS), and software as a service (SaaS). Most businesses are transformed by the “as a service” delivery model. Therefore, these companies are those that design and sell technology or use it as a raw material.

“Small business clients are increasingly expecting full-suite service offerings from their financial services firms – and our survey has shown that the majority of companies have yet to adopt modern technologies,” said Nick Chandi, CEO, and co-founder of ForwardAI. “Offering cash flow forecasting, funding advisory services, and promoting cloud-accounting software not only enhances a small business’s financial health and accounting efficiency but opens the door for companies to offer their client’s personalized solutions to make their businesses more competitive while meeting customer demands.”

Key highlights

• Financial firms across industries need to catch up: 52% of firms are not providing cash flow forecasting or funding advisory services.
• Only one in five firms (19%) provide both funding advisory and cash flow forecasting services.
• Bookkeepers, accountants, and accounting firms are ahead of the curve: Among accountants that provide funding advisory, over 75% of respondents also offer cash flow forecasting services for their clients, compared to 49% of bankers, financial planning, and financial service providers.
• Cash flow forecasting is crucial, but not everyone is doing it: Over 48% of accountants offer this service, while the banking, financial planning, and services industry (34%), and the fraud, insurance, and business valuation industry (32.6%) lag in adopting it.
• Geography plays a role in adopting modern technologies: While more Canadian companies provide funding advisory, fewer provide cash flow services or utilize cloud-based accounting software compared to the US across all industries.
• The US has a significantly higher cloud-based accounting software utilization rate of 55% against Canada’s 44%.