Information and peer analysis won't eliminate business worries, but financial firms cultivating small business customers believe online access to actionable performance and spending data will ease the minds of recession-weary clients.
Much like personal financial management has changed retail online banking by providing the newly budget-conscious consumer with a portal to fiscal transparency, banks such as U.S. Bank are betting the mix of performance and spend analysis and peer comparisons will prove just as sticky in the small business market.
U.S. Bank is in the midst of rolling out ScoreBoard, an online reporting tool that enables businesses to monitor their own spending and compare card sales data to other firms. "If you're a restaurant, for example, and going though the economic crisis, you can look at other business like yours and see month- to-month data to figure out if you're doing better than your peers," says Robert Kaufman, svp, small business division at U.S. Bank, who's debuting the free service to its small business cardholders and merchant processing clients-a total client base of more than one million. Kaufman did not disclose adoption numbers, saying the product has been available for only a short time.
ScoreBoard was developed through a partnership with Visa, internal IT work and WebFocus, a user interface provided by Information Builders. WebFocus uses business intelligence to combine business activity monitoring and complex event processing for reporting purposes. It also uses dashboard animation, personalization, and collaboration tools to monitor and track a business' financial performance. And "in memory" analytics helps the system locate outliers in large data sets, as well as embed predictive analytics into the system.
ScoreBoard stores three years of historical data, and makes the info available on a dashboard, through which small businesses or merchant processors can perform a variety of spending and financial performance analysis. U.S. Bank's ScoreBoard- which can download reports to Excel, PDFs and Quickbooks (Kaufman says internal research shows 60 percent of small businesses are using Quickbooks)-includes charts and graphs to provide a monthly snapshot of credit card transactions and payments. It also includes a view into merchant accounts, tracking sales transactions when customers use cards for payments.
"Most small businesses have been just checking their balances," says Christine Barry, a research director at Aite Group. Barry says that given the breadth of information that small businesses need to track-and the fact that the small business market has been relatively underserved by financial institutions-banks are increasing both the function and usability of their financial management services for small businesses.
Steve Murphy, a research director for wholesale banking at TowerGroup, says the activities of small businesses are expanding to include more "large business" type functions, such as cross-border payments. "There is a market for this [self-directed financial management]," Murphy says, adding SunTrust, Key, PNC and large Canadian banks are actively tapping the space.
In online forums, small business owners are clamoring for Quicken and Mint to offer PFM services for small businesses-though the firms did not return inquiries regarding whether they plan to do so. A recent startup, InDinero, a firm funded by VC firm YCombinator, offers a dashboard that links to a business' bank accounts and tracks cash balances, income, spending, profit and other information. Jessica Mah, co-founder and CEO, says the new firm hopes to partner with banks to reach the small business market. "Accounting software was built for accountants. Business owners need an equivalent, and we have not seen that."
Another bank, Wells Fargo, has built a small business management system that allows a range of functions, such as a tool enabling users to manage and monitor employee purchase budgets-with alerts when spending thresholds are approached. The bank also categorizes and tracks debit card transactions, bill payments and overall cash management on a free platform that's downloadable to Excel or Quickbooks. "The big difference [between small business online financial management and consumer PFM] is that small businesses are looking to monitor business expenses and are paying close attention to receivables," says Richard Weeks, an svp in the business Internet services group at Wells Fargo.