Fintech under the hood
Month after month, I share insights about how fintech solutions change the way the world of commerce is working. This month I thought it might be good to look into a specific industry to see just how much fintech is playing a role. I also thought it would be fun to look back to one of my first jobs and see how much it has changed thanks to all the new technology.
We all have those starter jobs when we are young. Long before I came to work for FIS
A few months ago, I dusted off those old work boots and rejoined the workforce for Mike’s Elite Towing in Sarasota, Florida for a weekend. While being behind the wheel brought back memories, I was blown away when I talked to the owner, Mike Gronow, about how the evolution of financial technology has totally changed the towing industry.
It’s a story that has played out in small businesses regardless of their industry. Thanks to fintech innovation in mobile and digital technology, there has been a massive migration in payment products and services for small and medium-sized businesses (SMBs) that help ease the access and management of capital. Namely: how they get paid, how they pay others and how money moves around. In the past, SMBs would turn to their local bank for solutions and support and do a lot of work by paper check. Today, thanks to technology, there are seemingly endless financial solutions available to make finances easier to manage. According to our latest SMB PACE survey, 94% of U.S. SMBs adopted new or improved technology during the pandemic, adapting to new payment methods and channels to streamline their businesses.
When I was driving all those years ago, drivers couldn’t be caught with a flat on I-75 without paper checks or cash—we just didn’t have the infrastructure and mobile technology to accept cards out on the road. And it’s incredible to see how the digital revolution is changing how we do some of the most basic financial transactions.
Here’s how SMBs can tap into fintech to make sure their dream of running a business doesn’t turn into a nightmare.
Fintech makes it a much smoother ride
Towing equipment is the backbone of Mike’s business, and with a fleet of trucks that has seen over 50 new pieces of equipment come and go, commercial lending is one of the biggest changes. Commercial lending software and risk-based pricing models are both products I’ve worked on, and Mike thanked me for making it a lot easier these days. The fuel that runs Mike’s business is diesel fuel, and nothing is more important to running a tow truck than fuel. It’s one of the biggest costs for this industry and the corporate fleet card has come a long way to help make it easy for Mike’s drivers to get gas across the state. Integrating this payment function into stations across major fuel brands and using a chip-based plastic that also links to rewards programs are two more products that I have worked on. Another card widely used in the towing industry is the prepaid stored value card. Often used to distribute daily working cash needed to make small work-related expenses like repairs to a flat tire, picking up cars from other tow lots, etc. Luckily for Mike, his customers need that help more than he does most days.
In addition, we talked about the long drives to Miami and Jacksonville and how toll booths are linked to automatic payment by the tag and how for many trucks the weigh stations have mobile integration into the trucks for fees and verification. Many of his colleagues in the industry can set up these tools through their electronic banking sites now as banks continue to grow the B2B services they provide. And now, many tow companies now provide payroll cards to employees which is easier than having everyone return to the office to grab their paycheck.
At the point of service, Mike’s drivers need to be able to accept an array of payment types, because chances are these days the poor soul with the flat on the side of the road has a wallet full of plastic without much cash. Every small business is run on financials and payments are critical to success. There are dozens of options out there to serve an SMB’s needs, but choosing the right ones will make managing operations and cashflow that much easier.
Hit the brakes and slow down
Whether it’s Mike’s Towing, a flower shop or a landscaping firm, SMBs are faced with many decisions when it comes to financial services. Most SMB founders aren’t necessarily experts in back-end technology that it takes to run a business and move money from customer to supplier, employee, etc. Business owners are becoming savvier to the new technology that is becoming more scalable. There are a truckload of solutions that are designed to evolve with a growing, changing business. There are also options to help manage cashflow like buy now, pay later (BNPL) or a business owner can align with self-financed vendors that can provide equipment leases independently because they have established the backing of banks and other financial institutions. What’s more, the right financial partner can also deliver analytics and data that powers new business strategies while scaling with that business growth.
For SMBs today, operating a business is all about managing the flow of money in and out, from customers to employees and vendors, while looking for areas to grow. There is no shortage of sources available to help —many of which are through the financial channel. Just like the world of tow trucks, every industry has dozens of financial needs that are being met daily by novel solutions. But, if one doesn’t think carefully about how they accept, track and report money, it could turn the dream of operating a business into a nightmare.
Small business owners don’t usually start a business because they’re experts in financial services or payments; they get into business because they are passionate about an idea and saw an opportunity in the market. While passion is a critical component to success, SMBs like Mike’s Elite Towing survive and adapt by engaging in that new technology and adjusting to quickly learn the financial tools that empower them to grow the business without distracting from focusing on the work they were passionate about to begin with.
Fintech puts SMBs on the road to success
We’ve come a long way in the 30 years that Mike has been in business and I drove a flatbed tow truck. Cash was king in those days. When I rescued a stranded motorist, payment was a tough topic and collecting was a stressful task. Now, tow truck drivers have cloud-based digital devices for credit card payments, or they can accept instant payment with a digital wallet. Our research showed that SMBs are spending more on payments tech – with 56% of SMBs currently having a mobile POS system and an additional 28% planning to use one in the future. This certainly helps with convenience, cash flow and productivity. And, after all, who carries cash with them anymore?
In the not-so-distant future SMBs will benefit from new click-and-fund solutions embedded in the daily operations tools of the businesses themselves. This will create embedded experiences that will meet the SMBs right where they operate—in their accounting solutions, like verticalized software platforms, to create seamless banking/financial experiences. Click-and-fund solutions focus on financial health and proactive engagement around financial needs with an intelligence layer that understands the business.
We have come a long way in fintech’s role with SMBs, but it many ways, the journey for new and established businesses like Mike’s is really just beginning. Many thanks to Mike at Mike’s Elite Towing in Sarasota, Florida for giving me a great start in my working career and for showing me how the last 20 years in fintech links back to one of my favorite jobs.