On December 05, SME Banking Club (Poland), together with Charlie-India (Hungary), organized a Roundtable in Prague (Czech Republic) to discuss with the local banks the topic of the building of a productive ecosystem for SME customers.

Olena Gryniuk (SME Banking Club) stressed that adding convenience to daily banking operations is not giving a bank a competitive advantage anymore.

The analysis of online banking functionalities for SME customers in the CEE region shows (Online Banking for SMEs Study, SME Banking Club 2019) that main transactional operations and access to information about customer bank accounts, such as an overview of account balances, transfers in local currency and international and domestic transfers in foreign currencies, are implemented at most analyzed banks. So, this is a standard functionality an SME customer can have in any bank. Meanwhile, providing non-financial services, combined in the ecosystems that help entrepreneurs to develop their businesses is becoming a decisive criterion of choosing the bank by small businesses.

Pic.1. A snapshot of the Study: Online Banking for SMEs Study for the CEE region.

Shortened version of the Study is available by the link. Watch video presentation here: https://youtu.be/JLOYDQDimZc

Integration of Value-Added Services (VAS) will become a must next year. 30% of banks in the region have integrated e-invoicing and online accounting services into their online banking systems. Integration of a BFM (Business Financial Management) module gives SME customers the possibility to analyze their account and expenses but also to forecast cash flow and manage a company’s liquidity. For the bank, this module ensures the possibility to cross sell working capital lending products and factoring precisely at the moment when a customer is in the red.

Business rationale for banks to provide non-financial services to SMEs:

  • Each bank must create its own business case and value proposition in a market. Non-financial services (e-invoicing, accounting, BFM) is a part of the value proposition
  • Cross-selling opportunities. Banks can offer new bundles of packaged services under combinations in which established traditional and new e-invoicing services are deployed together. Factoring and financing solutions contribute to revenues from lending

Business rationale for SMEs to have non-financial services from banks services (e-invoicing, accounting, BFM etc) from banks:

  • Automation of SMEs’ everyday job. Banks are able to integrate e-invoicing with payments in many creative ways. (e-banking, file transfer, authentication and call centre etc.). Due to the growing habit of electronic banking there is an automatic economy of re-use and repetition. This facilitates reconciliation processes and reduced errors.
  • Up to 50% of their time small businesses spend on the non-core activities, and this can be automated. Banks can increase SMEs’ productivity by providing subscriptions and/or connections to productivity tools.
  • Banks can make available invoice financing, factoring and credit enhancement facilities.
  • Banking channels can meet legal compliance and authenticity/integrity requirements

See full SME Banking Club’s presentation by the link

From the left to the right: Olena Gryniuk (SME Banking Club)> Katalin Kauzli (Charlie-India) during the Roundtable in Prague (Dec 05, 2019)

The beginning of the Open Banking era provides new opportunities to connect with banks-challengers, multi-bank platforms, and fintech companies.

Katalin Kauzli (Charlie-India) presented a case of OTP eBIZ – the first Ecosystem for the SME customers launched in the CEE region 2 years ago. Access full presentation here

Pic.2. Case Studies of Ecosystems for SME customers powered by Charlie-India in Hungary

Charlie-India’s mission is to convert all the invoices) into an automatically processable form, and decrease the proportion of paper or pdf invoices, which can be processed manually. And as the invoice is the for the payment transfer to be done via online banking by B2B customer, it makes sense to integrate the e-invoicing module (which includes not only the issuing of the invoice by the customer in the electronic format but also to receive the invoice from the counterparty (even from a different e-invoicing system, and also transaction matching for customer’s invoice data) into the online banking and mobile banking to business customers, that will allow customers to pay the received invoice by 2 clicks, without inputting all the data from the invoice to the transfer form to proceed the payment. This functionality works in the OTP eBIZ platform when the customer receives the invoice in the Invoice Inbox and by two clicks: 1 click – to accept the invoice, 2 – to pay it (see Pic.3), which is essential for SME customers for two reasons. The first one is, of course, time-saving and automation of customer’s back-office activities. And the second, a psychological one, nobody likes to pay invoices. So, the faster is the process, the better. Ideally – seamless for the customer.

Pic.3. Screen of accepting and payment the invoice by 1 click

The next step what Charlie-India is testing at the moment in Hungary is that communication between OTP Bank’s platform and the platform of the other Hungarian bank (See Pic.4). Banks are not integrated with each other, and they communicate the invoice data via a secured email protocol and a standardized invoice data structure, and this way, sent and received invoices can be processed automatically and paid with a couple of clicks.

Pic.4. Case Study of Invoicing & Payment Ecosystem in Hungary

Also, Charlie-India is working on adding to that ecosystem not only banks but also ERP companies, e-invoicing companies, and large invoice issuers and enterprise customers (like service providers, etc., because it can be relevant also for them to automate the invoicing process). The idea is to send invoices via the banks as service providers, and when you have invoice content in the bank as an invoice platform, people will use it. And the more users, the more payments will be made, and this is where the banks can earn: processing of the payments and cross-selling of the additional financial products based on the invoice data (overdraft, invoice financing, factoring, etc.).

From November 2019 Charlie-India provides an opportunity to participate a real-life simulation to show to the banks, what it is like to be able to work with fully accessible digital invoice data and how the bank can use it if all invoice data is available digitally. The simulation aims to demonstrate that the already existing payment ecosystem can be extended and connected to invoice data exchange. All interested banks are invited to join the simulation.

As a result of such simulation, banks will see how invoicing systems can be connected to the bank, how banking customers will be able to send and receive invoices among each other, and exchange invoices with customers of other banks and invoicing systems.

In case the bank wants to proceed to a real-life project, the test environment can be turned into a real project with no additional development to arrive at an MVP, which can be later tailored to the bank’s individual requirements. Apply to take part in the simulation by contacting Katalin Kauzli from Charlie-India at the contacts outlined below.

 

SME Banking Club is a club for SME bankers and financial companies providing financial services to small businesses. Its mission is to exchange best practices and ideas, and also to encourage the implementation of innovations in financial products for SMEs. Regions of activity: the Caucasus, CIS, and CEE countries. www: https://smebanking.club/

 

Charlie-India provides white-label e-invoicing solutions for banks and invoicing service providers. www: https://charlieindia.org/  Contact: Katalin Kauzli, Business Development Director, Katalin.kauzli@partnerhub.hu, +36205396527