Is business banking ripe for FinTech disruption?

There are always many reasons one might want to organise a trip to Paris. For the last couple of years, the Paris FinTech Forum has become another one of these reasons.

First launched in 2015 and hosted in the charming Palais Brongniart - the former stock exchange building – the Paris FinTech Forum has established itself as an unmissable date for financial services experts from all over the world.

The agenda of the 2020 edition – which took place on January 28th and 29th – saw more than 300 speakers explore topics ranging from new wearable devices for faster payments to how to embrace financial regulations as a competitive asset.

One of the best things about this yearly gathering is the opportunity it provides to cast a spotlight on the French FinTech scene, its key players and potential developments.

Over the past few years the French regulator, the Autorité des Marchés Financiers (AMF), has played an essential role in promoting FinTech adoption among traditional financial institutions, encouraging the sector to catch up with France’s most active neighbours, both on the continent and across the Channel.

More specifically, according to research by NewAlpha AM and Exton Consulting, between 2017 and 2019 the amount of funds invested into FinTech companies in France has almost doubled, growing from €335 million to €630 million.

Considering that in the UK – home of Revolut – the total of funds raised by FinTech start-ups in 2019 reached €3.9 billion, and in Germany – home of N26 – the number is close to €1.5 billion, the potential for growth in France is still vast. However, according to founder of Paris FinTech Forum Laurent Nizri, France’s FinTech sector is on its way to bridging the gap.

One of the companies currently at the centre of the French FinTech scene is undoubtedly Qonto, which raised €140m in funding in January 2020. Launched in 2017, Qonto is a challenger bank specialised in financial products for small and medium-sized businesses as well as freelancers and microentrepreneurs.

Qonto is a particularly interesting example of how the French FinTech sector – having established a strong presence in the retail space – is now attempting to disrupt commercial banking as well, making a competitive advantage out of ease of use, digital-first processes, lower fees and outstanding customer experiences. 

Not surprisingly, this is not only a French or European trend. In Hong Kong – well known as an arduous place for opening business bank accounts – Know Your Customer’s client Neat.hk is revolutionising the way that entrepreneurs can open a business account, get prepaid cards and send/receive money globally.

As entrepreneurs get increasingly used to the type of seamless digital experience provided by financial companies in their consumer sphere, they begin to expect the same digital-first approach also for their business banking.

And no phase is more crucial to the long-term success of a commercial relationship than its beginning, which in this case is represented by the client onboarding step. 

FinTech companies can easily transpose into business banking the same type of minimal-friction process that we, as consumers, have come to expect and love in our everyday life. The key is to provide a fully digital experience that automates the most time-consuming steps of the onboarding process but leaves the final decision on whether to accept a new customer or not in the hands of the compliance team.

More specifically, instead of asking customers for certified copies of their Certificate of Incorporation or Annual Return, FinTechs can partner with cutting-edge solution providers to implement regulatory technology that connects directly to company registries around the world and downloads official documents in real time.

International anti-money laundering regulations require financial institutions to collect and retain documentary evidence of the company structure of any of their business banking clients. By applying artificial intelligence, optical character recognition and machine learning to officially filed documents and extracting key information about companies’ shareholders, business banking FinTechs can sensibly reduce their onboarding time, while also strengthening their regulatory compliance.

Additionally, the integration with secure customer-facing tools (on both mobile and desktop devices) can accelerate access to revenue. For instance, the usually tedious and slow board resolution process can be streamlined through a mobile-first approach that not only verifies the identity of each shareholder, but creates a strongly authenticated digital signature that reduces the risk of impersonation while improving the overall customer experience.

When thinking about B2B and B2C business systems, we are often guilty of separating the two spheres with an impenetrable wall. We tend to forget that our identities as consumers or entrepreneurs do not exist in silos, but constantly pour over into different aspects of our lives. Similarly, FinTech companies that are ready to embrace the learnings from retail neo-banks and apply them to digital business banking can set the new standard that other players will be left to catch up with, both in France and beyond.