Powering Next-Gen Small Business Banking: Lili and Dun & Bradstreet are Transforming the CX with Embedded Finance

In today's digital landscape, small businesses expect more than basic banking. They want tools that support their growth. Lili and Dun & Bradstreet have partnered to offer an embedded solution combining banking, accounting and tax prep. In this session, the focus is on how they are delivering a unified digital experience, why embedded finance is key to future fintech-bank collaborations and how financial institutions can expand their digital value.

Transcription:

Mary Ellen Egan (00:11):

Good afternoon, everyone. You can hear me. I'm Mary Ellen Egan, the Senior Director of Strategy and Content for live media at American Banker. It is my pleasure today to introduce the discussion between Lilac Bar David, Co-Founder and CEO of Lili, and Leigh Luxenburg, Senior Director, Partner and Product Management at Dun & Bradstreet. Their session today is Powering NextGen Small Business Banking. Lili and Dun & Bradstreet are transforming customer service and the customer experience with embedded finance. Please welcome Leigh and Lilac.

Lilac Bar David (01:06):

Oh, it's working. Hi. Hello, everyone. Thank you for joining us. I know it's almost, it's us between you and lunch, so hopefully it's going to be interesting for you guys. Let's start with just a quick introduction. Hi, I am Lilac Bar David. I'm the Co-Founder and CEO of Lili. For those of you who know us, Lili is a platform for financial management for business owners. We offer accounting, banking, and taxes in just one solution. So what does it mean? If you are a small business owner and you want to open a Lili account, you are actually being offered a business checking account, a business saving account, a Visa business debit card, all of the options you would imagine to move money in and move money out, including remote check deposit, cash deposit, wires, and so on. We support business founders that are US-based and non-US from 30 different countries.

(02:14):

You also have an option to opt in for a full accounting software. It means you will get bookkeeping automation, financial reports, an invoice software, bill pay software, so full AP and AR solution. And we also cater for all of your tax challenges. So we define a specific percentage for every small business owner that covers federal, state, and city taxes. We automatically save for their tax payments and we also generate tax reports by the end of the year. So it's a very robust solution for business owners to manage all of their financial challenges. Recently, we have launched a full suite of products under the umbrella of Lili Connect, which is our embedded solution. And one of our earliest and proudest partners is Dun & Bradstreet. I want to welcome Leigh here to present D&B and tell us a little bit about themselves as well.

Leigh Luxenburg (03:11):

Thank you, Lilac. So Leigh Luxenburg with Dun & Bradstreet. We are almost 200 years old and the global provider of business data, public and private entities. Different uses of that data being master data management, sales and marketing, fraud risk, and compliance services. What we are here to talk about today is mostly supporting small businesses. We have millions of small business customers who come to Dun & Bradstreet every day to understand the health of their business, understand that there is business credit separate from consumer credit, what that means for their business, and depending on the stage of where they are, how that unlocks opportunities for them to grow and thrive throughout the years. So excited to be here. Thanks.

Lilac Bar David (03:58):

Thanks, Leigh. Before we start, I just wanted to dive in a little bit about small businesses in general. The funny thing is that according to the SBA, a small business is a business that has one employee to 500 employees. The difference between those businesses is really crucial because a business of one, or maybe even one to 10, is a business of a founder that is doing every financial task by themselves. So they are the CMO, the CFO, the CPO, the COO. They have a lot of responsibilities in regards to financial management, as opposed to a business of 500 employees, which means they will probably have a CFO full-time position or VP of finance, a lot of people taking care of all of the operational tasks of the business, and so on. But if we are looking at all of those smaller businesses, like one to 10, and where their challenges are, it's actually handling a lot of those different day-to-day tasks in regards to expense management, cashflow projections, tax liabilities, and so on.

(05:01):

They're looking for an easy, all-in-one, affordable, simple solution. In a recent study that we have done, almost 80% of those small businesses will want to have an all-in-one solution that will be highly automated in regards to all of the different financial tasks at an affordable price. I think a lot of them are still depending on spreadsheets and manual processes, which are very hard to scale and even harder to manage. So if we're looking at the small business segment and the potential in regards to leveraging growth and sponsoring growth and scale, one of those areas that they're all looking for is accounting and taxes. They're still relying on banks for basic financial management, but from a value-added services point of view, they're looking elsewhere in regards to accounting software, tax solutions, CPAs, and so on, which are more expensive. On one hand, they have to do a lot of reconciliation tasks, and so on. I think that's where we found the embedded finance solutions, where we can offer an all-in-one experience. It's super interesting for small business owners, and I think one of the partners that actually identified that specific challenge in the early days was D&B. I want to refer to Leigh to talk about from a strategy point of view, what Dun & Bradstreet really thought about it, and why did they decide to embed all of those different products.

Leigh Luxenburg (06:31):

What we've seen and researched is that businesses are going out of business at a rapid pace, and it's increasing. In 2024, we had a 6.2% increase year over year of businesses declaring bankruptcy. That's slightly decreased from the year before, but the numbers of businesses actually becoming insolvent is growing exponentially. It's about a hundred businesses per day that are going out of business. That does add up when it comes to, as Lilac said, small businesses. These are solopreneurs, one, two, three people. They think they can manage their finances manually, and they're finding that they end up unable to do that and their businesses can't survive. So providing these tools to help them really understand their financial health is what we want to help do. Of course, not directly. We want to partner with the best in the industry. So by providing access and an easy way for our small business customers to understand the need for them to manage their financial health as well as those ancillary services—bookkeeping, tax, accounting—it will help them continue to be a business, right? Instead of having to unfortunately close their doors, which is happening too often. So we really want to make sure we're positioning the right tools and services for our customers in an easy way to do that. With the embedded finance, we've actually also embedded the application and onboarding to get to those tools with Lili.

Lilac Bar David (08:04):

Thanks, Leigh. I think both of us are really focused on education as well. We invest a lot in content and resources, whether it's webinars or blogs or handbooks and so on, to make sure that they do have access to all of the different knowledge that they need to have to better take decisions for the business and business growth.

Leigh Luxenburg (08:24):

That's right, education is number one. I think we know this industry, the small businesses, they don't know what they don't know. Between our two organizations, really helping them understand that there are certain aspects of their business processes that need to be handled maturely is so important. Through our thought leadership and our different avenues of being able to reach those customers, I think we're really making an impact there and helping that education get out. In addition to the finance part of everything, there are other scores and ratings that D&B uses to assess these small businesses that then other businesses that they want to be partnered with or work with rely on that data. So that data, the health of that business, the information from Dun & Bradstreet really helps them rise to the top of other providers in their same area, as well as just understanding where they are and what they need to continue on.

Lilac Bar David (09:30):

I think you'd be surprised to know that businesses, although they're not used to getting accounting and tax services from financial institutions, it's actually an experience that is well embedded within the money movement. Because every transaction, whether it's money in or money out, actually has an accounting impact. It's an income, it's an expense, it affects your P&L, it affects your cashflow, it affects your tax position at the end of the day. I think where we're presenting all of those different experiences in an all-in-one solution, it's very easy to use and very easy to understand. And it's also affordable. It's like half the price compared to having a bank account, an accounting software, and a tax piece. At the end of the day, one of the elements that we are working on is also making sure that the products would be affordable for all of the different businesses that have a lot of challenges to grow and scale.

(10:25):

And also giving them access to VIP services that are mainly served for the bigger corporates in the US economy. When we were looking into D&B, one of the angles that we wanted to solve was also access to credit. When we are looking at the numbers, 80% of small businesses are very challenged by building business credit and getting access to credit, and it affects their growth and scale and also affects their financial stability as a whole. So that's an area that we wanted to develop together with D&B, which is their business bureau for business credit. Do you want to mention a little bit about that, Leigh?

Leigh Luxenburg (11:06):

I'd love to. Thank you. So in addition to really giving these customers the tools they need to work with on a daily basis to thrive, we want that education. We want them to understand that business credit. Again, most small businesses starting out don't even know that that exists. That is how they are seen when they're out in the world. Not only do they need services like business bank accounts to get underwriting for insurance, for SBA loans that they want to go get and grow, those credit scores are impacted by the availability and the connectivity they have with their financial information. Their banking platforms, as well as understanding how they pay their bills, right? If they are not paying bills on time, that information is provided out further. Dun & Bradstreet has provided a way through the embedded nature, as we're all talking about, and giving that information to the small businesses through partners so that we are getting them everything they need where they are.

(12:08):

I think that's really key when we're talking about these small businesses that don't want to be jumping around from application to application. So Lili, we're so excited as our first partner to go live with our connected credit application information, kind of all things where we're able to give the Lili customers insight into that business credit without leaving Lili. Not just a number, but the education and the understanding of what does it mean, what does it mean for their business, how can they improve it, not just a read-only version, and what else can they do to make sure that they are getting top-of-the-line scores and how they're seen outside. So we're very excited for this partnership.

Lilac Bar David (12:51):

And us too. I think the program to help businesses build and scale their business credit, and also to monitor business credit in real time, is facing one of the biggest challenges that they have in navigating access to credit in general. I think that's a testament to how do you build a successful partnership? And I really want to dive into that as well, because it's not just about the technology. Of course, the technology needs to work and the product is the key, and you want to build great experiences, but it's not a one-time thing. For us, it was really about iterating a lot, AB testing with different medias, different messaging, whether it's the embedded experience, email, postcards, banners in different ways, before looking after looking, and so on, but also about building products together. I think one of the products that we are building now, the program to build your business credit, is a testament of how do you build business products together, which we didn't have and we didn't imagine on day one. So it's been almost a year, a very productive year where the teams are meeting on a weekly basis to discuss, to change, to launch. It's all about building partnerships to have a successful product into market.

Leigh Luxenburg (14:06):

That's absolutely right. There's no set it and forget it in partnerships with us. Meeting regularly on a weekly basis, testing campaigns, really seeing what works, what doesn't work. Also, understanding industries and verticals. The messaging is different. The customer types are different. There are small businesses with one and two employees, and then there's 50 to a hundred, and what they need is different. So being able to really dive in together and really show up together, I think is the most important part where we're able to understand what do they need. And if something's not working, we are able to pivot together. We want to continue to find more opportunities to broaden that messaging together. Here's one great example of us together, but really the innovation for the benefit of the small businesses. Lili being able to provide information back to D&B to help with the data to help the businesses. It really comes down to making those small businesses more successful.

Lilac Bar David (15:09):

And a lot of customer feedback, whether it's reviews, testimonials, whether it's panels or just calling back customers to get some insights on an experience, a customer service experience, a product, and so on. And tracking key metrics on KPIs, on the onboarding application, the usage of the card, the building, your business credit, and so on and so forth. I think those are all super important. And we are differentiating between messages, between medias, and so on.

Leigh Luxenburg (15:40):

That's right. We find them where they are.

Lilac Bar David (15:45):

I think last but not least, what does it mean for financial institutions? We have partnered with D&B, which is not a bank, but I think honestly, this is something that banks need to look at because SMBs are expecting more than just storing the money in regards to financial services. The challenge they're facing is really more robust than just moving money in and moving money out. I think financial institutions are actually at an intersection of being able to serve businesses better with real-time data and real-time insights and all of those different financial tasks that they can automate for the small business owners. I think the majority of the banks will invest more in bigger companies where they can get more loans, more money, and less, I want to say, less churn. But if we want to help those businesses succeed, we do want to offer different services.

(16:41):

Although what we have with the D&B team is a full embedded experience with banking, accounting, and taxes, Lili Connect also has an offer for just the accounting and tax piece. So whether you have a financial institution relationship, we can build the accounting and tax on top of your existing relationship and cater for all of those different tasks, whether it's AP, AR, accounting automation, taxes, and so on. I feel like the future of SMB banking is really not just about the banking itself, it's actually about all of the different value-added services that we can add on top of that to make sure they have all of the ways to sponsor and succeed.

Leigh Luxenburg (17:23):

We're in the same boat where we want to be able to also provide as much service and support and product to our customers. But we at D&B are not going to be the bank or the accounting firm. So we want to make sure we are making access to that easy and to the right partner. Obviously, there are many out there, but really making sure our customers are taken care of because we're connected and the reviews and the feedback are very important to us. So obviously making sure we're setting everyone up for success, including our organizations and mostly the small businesses. It's really making it easy for D&B to support those customers for everything they need.

Lilac Bar David (18:11):

So that's it for today. Thank you for listening. If anybody has any questions, we're happy to take them over. If not, it's us between you guys and lunch. Lunch time. Thank you so much for joining us. Have a great conference. Thank you, everyone.