There once was a time in the American economy when workers would land a job with a large company and spend years working their way up to positions of more influence and responsibility. That is no longer the case, especially for younger employees. In fact, the U.S. Bureau of Labor Statistics (BLS) reports that workers between the ages of 25 and 34 stay in a job for less than three years on average while those 55 and up stick around for over a decade.
But something even more disruptive than perpetual job-hopping is underway. Rather than pursuing traditional full-time employment with a big corporation, millions of Americans are instead opting to become entrepreneurs, freelancers or small business owners. According to the BLS, nearly 17 million Americans are self-employed. In addition, Zippia Research reports that there are about 33 million small businesses in the U.S. today.
A host of factors are driving this transformation of employment in America. At one level, the dislocation and disruption of COVID-19 prompted many workers to reconsider their career choices. That restlessness was manifested in the Great Resignation and the ongoing scramble many employers have had to fully staff their companies.
Traditional banks aren’t adequately serving the needs of entrepreneurs and small business
Regardless of the reasons propelling the growth of entrepreneurs and small-business employment, it has become clear that traditional banks are not meeting the unique financial needs of this increasingly important market.
“The traditional banking sector has neglected the needs of this segment by forcing customers to choose between their personal and business accounts,” said Greynier Fuentes, vice president of digital solutions for Veritran, a leading global financial technology solutions provider. “In many community banks or credit unions, it’s a matter of resources. They don’t have the resources to come up with innovative solutions to address the particular credit and loan needs of these customers.”
Other roadblocks prevent traditional banks from better serving the needs of this segment of customers. Often, banks have trouble evaluating risk with customers who have inconsistent income or short financial histories, which is common among freelancers and new entrepreneurs. This makes it difficult for the banks to offer loans and other products that customers need. Another hurdle banks face in serving entrepreneurs and small businesses comes from the fact that a customer’s business and personal data is often stored in different silos across the bank. When this is the case, it is hard for banks to deliver a seamless customer experience.
Many fintechs have seized on the frustration small businesses and entrepreneurs feel toward their banks and developed solutions that are easy for customers to use. But fintechs are ultimately only able to offer a limited solution. “There’s only so much fintechs can offer. But at the end of the day, it’s limited because there’s a lot of regulation around digital payment and collection solutions, and fintechs aren’t able to comply,” Fuentes said. “It’s a great opportunity for traditional banks to come in and offer solutions to cater to this overlooked segment because they meet regulations around digital payments, collections, money movement and fast funds.”
A unique small-business solution
The opportunity to better serve this important market segment led to the recent launch of Fusion by Veritran, a small-business solution designed to help banks, credit unions and other financial services companies meet the unique demands of these customers.
Unveiled at the Money 20/20 conference in October, Fusion by Veritran helps traditional banks provide an easy, unified experience for customers to manage the entirety of their financial life. “Now consumers have access to not only their personal financial data but also their business data in one single app,” Fuentes said. “When you merge these two worlds, self-employed individuals and small business owners can make better decisions about the money that’s coming in and the expenses that are going out.” Among other features, Fusion by Veritran enables digital payments, financial management tools, secure transaction approvals and real-time notifications. The solution also empowers users to easily track income and expenses and set up “pockets” that represent specific financial goals or projects like no other.
Fusion by Veritran is also plug-and-play, meaning that it’s simple and fast for financial institutions to integrate the solution. It’s also highly scalable, allowing for new functionalities to be added quickly. Ultimately, though, one of the main benefits is simply that the solution helps banks and credit unions unify and control the experience they provide customers. “At the end of the day, users don’t really compare the institutions they bank with. They compare the experiences they have,” Fuentes said. “What we’re trying to do for financial institutions is give them 100 percent control of the user experience and allow them to provide a unified experience across channels.” After all, consumers just want a personalized and integrated experience, quality of care, and a secure technology platform.