Mobile checking fintechs look to pick off unhappy small-business customers

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A Canadian fintech is the latest entry into the growing mobile-first checking account market catering to entrepreneurs and gig economy workers.

Toronto-based NorthOne is designed to help manage the financial minutiae that comes with operating a small business, offering insights into revenue and cash flow through integrations with popular services such as Quickbooks, Shopify and Xero and free subaccounts for taxes and payroll. The fintech is priced on subscription tiers based on how many transactions a business does per month.

Justin Adler, NorthOne’s co-founder and chief operating officer, said the account’s back-end features are meant to eliminate some hassles for freelancers and business owners attempting to manage finances on their own.

“We started at the pain points and worked backwards,” Adler said.

NorthOne’s foray into the U.S. comes at a time when other fintechs are attempting to corner this market with a digital-only offering.

Earlier this year, Joust launched a mobile banking app designed for the 56.7 million Americans who rely on freelance income. Joust has a partnership with nbkc for Federal Deposit Insurance Corp.-insured bank accounts. NorthOne, which also has offices in New York and Los Angeles, is working with the fintech-friendly Radius Bank in Boston to provide the FDIC-insured accounts and issue debit cards.

Azlo, which debuted in 2018, works with BBVA to provide a digital-only bank account to what the fintech describes as “underserved entrepreneurs.”

“There’s a similar catalyst that probably started a lot of these companies,” Adler said. “For us, it’s about who we’re looking to serve. All the functionality for us is reverse-engineered from the operating needs of a true small business, not one that’s necessarily a flashy startup.”

Overall, small-business owners appear to have an appetite for better banking services. J.D. Power’s most recent small-business banking satisfaction survey found only 28% of respondents said their banks have a specialty small-business offering.

Mobile app use also is low among small-business banking customers, with 48% saying they don’t use such offerings.

NorthOne comes to market with three different subscription tiers.

The lowest, at $10 a month, is meant for freelancers who do no more than 20 transactions per month. The price jumps to $20 monthly for businesses doing anywhere between 21 and 45 transactions per month. For any business that does more than 45 transactions, the price rises to $50 per month.

Adler said the pricing model is flexible and businesses are not locked into one price if their transactions don’t continuously fall into an initial tier.

“If an ice cream shop’s transactions drop in December, then the price drops, too,” he said.

The fintech also tries to keep its services flexible too. For example, NorthOne CEO Eytan Bensoussan said it was vital to give entrepreneurs the ability to send a wire transfer at any time while on the go.

“We thought it was important for businesses to have the ability to do wire,” Bensoussan said. “Even if they do it once a year, I know how important it is for the business owner that if my supplier absolutely needs a wire for something, it can be done easily.”

The mobility of NorthOne’s services was intentional from the start. Bensoussan said he studied challenger bank models in Europe because many North America lacked those options.

“When you look at the feature sets of the newer-age challenger banks, that’s where you see where the rubber hits the road,” he said.

“We made a deliberate choice to design first for mobile,” Bensoussan said. “That had to be the starting point. And then we sliced away some of the functionality for online. It's actually much harder to truly embed the functionality of a phone into what started as a web experience.”

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