Businesses, like consumers, aren't fans of banking software, but they trust them. So the question we at Pollen HQ asked ourselves was; ‘How can we build a better digital business banking experience which doesn’t require the company to actually change bank?’.
How could we offer an amazing user experience, similar to the other software products we use every day (Amazon, Gmail, Uber, Slack, etc). With real-time payment and receivable capabilities, direct API integrations to all of their other systems for seamless transfer of data, and one-click access to third party financial products and services.
We started by laying out a set of core beliefs which would drive our product development decisions:
1. Card payment networks are the present but not the future
Account-2-Account payment networks like FaterPayment, SEPA and ACH are faster, cheaper and more secure.
2. Payments are a commodity
Don’t have a ‘per payment’ revenue model. It’s a race to the bottom. Make payments free.
3. Different businesses require different financial products
All businesses are unique. The more choice and unbiased advice the better.
4. Our revenue model needs to align all stakeholders
Monetise through use, not misuse i.e. penalty fees.
5. Businesses don’t want to change bank
Banks are regulated at that level for a reason. Partner with them don’t compete.
6. Design to solve the needs of your users
Define the purpose of your product for customers first, before the actual product.
7. Data security must be a top priority
You will be handling sensitive data. Go above and beyond to protect it.
8. Connectivity will help all business processes
Don’t silo yourself off like a bank. Play with everyone.
Ok, but what’s the actual product.
Step 1. Defined initial use case
Cross Border Payments, at scale.
During an initial scoping interview, someone commented: “It takes the same amount of effort to do 1,000 UK payments as it does to do 1 international payment”. This peaked our interest as a problem we wanted to fix.
Companies would use our software instead of their banks system to manage cross-border payments. Which were traditionally done with a combination of phone calls to FX brokers, excel spreadsheets and manual data entry. In return receiving no reconciliation, guaranteed arrival amounts/times and standardised beneficiary information; which can delay payments a further 3 days or return of funds which can take up to 14 days. Adding friction and expense to international trade.
From a business point of view, we wanted to build an initial product that solved a pain point through better use of software, whilst developing our A2A capabilities. One that also had a clean, simple revenue model that provided a direct cost saving benefit to the customer.
Step 2. International Collections
Alongside a better customer experience for making and managing payments cross-border, we wanted to enable businesses to also be able to receive funds more easily from international payers.
From within the Pollen platform, companies can do things like set-up a bank account in another country with the click of a button. Hold balances in 30 currencies and trade freely and instantly between them. No more capital requirements and 6 month wait times. So now they have the ability to operate like a multinational corporate, all from a single cloud based platform.
We will also help business with making sure they receive the correct amount of local currency, with our ‘Request to Pay’ functionality enabling them to be guaranteed to lock in a the right amount every time irrespective of currency fluctuations.
Step 3. Same-currency payments and Open Banking
As a London headquartered business, UK SME and Outsource Service Provider businesses are our initial target market, and with only 5% of a businesses payments being cross-border, we want to make sure our platform is equally as capable with UK only payments.
As we build out our platform with the strategy of trying to build enough capabilities that a business customer can keep their existing bank relationship but never have to log into their bank account again. And with the new Open Banking initiative, banks are opening up via API’s for the first time ever, but only to specially regulated fintech businesses.
Pollen is one of the first in the UK to have both Open Banking permissions and be a Payment Initiation Service Provider (PISP) and Account Information Service Provider (AISP).
Balance checks, transfers, payment creation and reconciliation can all be done via Pollen, and our interaction with a companies existing bank accounts.
However we see this as an opportunity to partner with banks, not compete, as they will still get to keep their customer relationship, unlike the strategy of new challenger banks. And be able to offer their business customers a better customer experience, built from the ground up using the latest and most scalable technologies.
Step 4. Build powerful feature set into UI and API
The key enabler of enterprise software is connectivity. Fintech has until now been lacking the ability to link UK bank data with the rest of their systems, due to the lack of banking API’s. We have then layered our own capabilities on top, taking a ‘jobs’ approach by building features that fit a businesses jobs/roles, rather than the traditional banking view of ‘bank first, customer second’.
Compliance, fraud monitoring, reporting, approvals, communication, reconciliation. All built in to remove friction in people carrying out their roles.
Imagine being able to initiate payments directly from your accounting system in real-time or even receive a notification via slack that a payment has been received and reconciled against an outstanding invoice.
Step 5. Building relationships with payer and payee
Payee capabilities will initially allow a beneficiary user to self-onboard and see what payments are owed to them and the expected date of arrival. No more wasted time for the finance teams having to phone/email asking when they are going to get paid.
With this stage we have been asking the question; could we turn a businesses payables from a cost base into a profit centre?
We will be doing this by giving payees the ability to offer ‘Early Payment Discounts’ via the Pollen platform. Aligning both payer and payee in a way that cannot be done with traditional banking software.
Step 6. Financing products
In a perfect world, the receiver would want the money in real-time, and the sender would want to give the money as far out in the future as possible.
Estimates are that £44.6 billion in late payments is owed to small-and-medium sized companies, and that overall lending to SMEs could soar above £50 billion this year.
As we build up data on each and every payer/payee relationship we will look to offer financing terms so that both parties can choose when they would like to get paid, independent of the other, with Pollen handling credit allocation and reconciliation.
This will initially be in the form of payroll salary advances, where employees can choose when they want to get paid each month, followed by invoice factoring an eventually longer term credit by analysing historical bank account data instantly via our AISP integrations.
We don’t plan to use our own capital for financing, and instead will aim to utilise partnerships with banks to enable them the ability to not only offer their business customers a market-leading technology platform, but also create a new revenue stream by deploying capital via Pollen and helping support the growth of their own customers.
Step 7. Marketplace product
Banks have traditionally been verticalized providers of products to their customer base, our goal as an open banking platform is to provide our customers with access to a broad range of financial products from both specialist fintechs and the banks themselves.
Pollen will hold a centralised KYC record, allowing for a seamless ‘one click’ onboarding experience to new products or switching to a more cheaper/better provider.
We envisage companies being able to compare savings accounts from a range of banks, insurance products such as invoice insurance from insurance companies and niche financing products from specialist providers.
Who knows, maybe a part deux.