" class="no-js "lang="en-US"> EXCLUSIVE: "SME Banking...Without Banks" - Thomas Vles, Ageras and Nicolas Benady, Swan in 'The Fintech Magazine'
Tuesday, April 23, 2024

EXCLUSIVE: “SME Banking…Without Banks” – Thomas Vles, Ageras and Nicolas Benady, Swan in ‘The Fintech Magazine’

Wrapping banking up with other business management tools could have a transformative impact on SMEs. Thomas Vles of Ageras and Nicolas Benady from Swan explain how such BaaS partnerships work in favour of everyone in the value chain

We’re used to hearing the Uber customer experience held up as an example of a great embedded finance model – and it is. But what if your customer isn’t an individual, but another business?

Denmark-based Ageras was founded in 2012 as an online marketplace where small and medium-sized enterprises (SMEs) could find an accountant that suited their needs, statutory requirements and budget, while accountants could expand their business by subscribing to the platform. It expanded into Sweden and Norway, then the Netherlands and Germany, before taking the leap to the US.

Over the years, it extended the suite of products available over its platform, becoming a leading software-as-a-service (SaaS) provider of integrated accounting, administration and tax solutions for thousands of small and micro business owners. The one component that was missing was banking services; it was the next obvious step.

“So, we started with the process of obtaining our own banking licence… from first-hand experience, I can tell you that’s not something you want to be doing, even as a big company,” says Thomas Vles, Ageras’ chief revenue officer. In fact, it abandoned the idea in favour of itself buying in the service from Swan, a French startup with an e-money licence, which enables other companies to offer accounts, cards and payments to their customers.

Swan went live in 2021, having started in stealth mode in 2019, and it already has some seriously big names under its belt, including French retail giant Carrefour.

One of the fastest growing banking-as-a-service (BaaS) providers in Europe, Swan helps put banking services right where an end-user needs them and, in some environments, doesn’t even notice them.

“With the data we get from banking, we can automate a lot of other processes that go further than a payment”

Thomas Vles, Ageras

“Embedded finance, for me, is when the transaction happens when you want it, where you want it,” says Swan CEO Nicolas Benady. “And so the best example is Uber; when you get out of a cab and you know that you’ve paid, but actually you don’t do it. It’s totally transparent in terms of the customer journey.

“Then put yourself in the shoes of the driver – you don’t have to go to a bank to order a card machine, a POS terminal, it’s all embedded into the app,” continues Benady. “For me, that’s a truly embedded finance function.” Vles believes banking-as-a-service has been a pivotal development for software service providers such as Ageras because

it allows those with SME clients, in particular, to offer so much more than has historically been available to these clients from a high street bank.

“With the data we get from banking, we can automate a lot of other processes that go further than a payment, such as accounting, paying taxes and all the stuff that is really hard for many small business owners the world over to do,” says Vles.

SMEs often don’t have the bandwidth and/or financial resources to adequately scrutinise/pay for management tasks – be it accountancy, tax returns or cash flow management. So being able to semi-automate them and have those functions ‘talk’ to each other over one portal, especially if linked to banking services, is a real boon. Vles uses the example of VAT accounting.

“In most countries, when people send an invoice, they have to charge VAT, but then – usually after a quarter, sometimes monthly – the VAT needs to be paid back [to the government]. By storing that money in a separate IBAN account that we offer them, the business always has access to that money, but they know they are sort of borrowing from themselves if they use it. The same goes for corporate tax.

“We have also introduced savings accounts where people can put money away for certain goals; and we can help them with that by gamifying savings a little bit. These kinds of things are super important to help people not make missteps.”

There are business benefits that accrue to the SaaS provider, too, by including banking services for their customers.

“Embedded finance is great for end-user customer journeys. But it is also good for companies like Ageras, because they offer clients better software, with a better user experience, and so they can charge maybe a bit more,” says Benady. “And, even if they don’t, we bring them a new source of banking revenue, through interchange fees around card payments – we are happy to share that revenue with our partners.”

That ability to bolt on another instant revenue stream, thereby hopefully accelerating the journey to profitability, is especially useful for SaaS startups who want to look convincing as an investment target in the current climate. Meanwhile, Benady describes Swan’s job as ‘taking care of complex things like complaints, security, and fraud management, regulation’.

“This is our job, and we leave the hard job of accounting to our clients, because everybody has a job, everybody must focus on one thing.“Some of our clients are just small startups, with three people in a garage and a good fintech idea, and they can start building it with us,” he continues. “The barrier to entry is close to zero today, when you want to embed finance.”

“The barrier to entry is close to zero today, when you want to embed finance “

Nicolas Benady, Swan

Embedded finance wasn’t really accessible to smaller businesses until the arrival of BaaS providers such as Swan. Nowadays, even micro companies can build tailored banking services, so long as they meet the relevant compliance requirements.

“We are quite a well-sized company, but even for smaller ones, these new technologies not only allow them to onboard customers, but also customise all the aspects of banking to their needs,” says Vles. “In our case, it allows us to create a banking product that is specifically for small business, and also helps us with the accounting part.”The ease of onboarding is what helps set services such as those offered by Ageras apart from traditional high street banks, he adds.

“In many markets that we now offer banking, we see that know-your-customer checks take weeks, sometimes months, sometimes forever, as some banks will not allow new people to onboard,” he says.

By contrast, Ageras has onboarded small business customers in under seven minutes.

“It’s an amazing advantage to have in a market that doesn’t even want to serve freelancers or small businesses,” Vles adds.

Indeed, the advantages of BaaS for SMEs have led some to question why they’d want a relationship with a bank at all. According to one survey this year among 1,000 businesses in the UK, Belgium, and the Netherlands, half believed BaaS will spell the end of traditional banking. Another survey found that 30 per cent of UK SMEs were interested in using financial products embedded in services such as accounting packages, but concluded business owners needed more education on how they could be used and they also required more choice.

Ageras has now acquired a range of specialist providers across Europe, including Cloud-based accounting software solutions Billy, Tellow and Zervant, German neobank Kontist and payroll platform Salary.dk.

It has also launched its own fintech solution, Ageras Finance, to address the gap in capital available for small businesses. Swan is all about providing options to its users, too. In Europe, which may be unified on many fronts but still has local bank accounts and payment rails specific to each country, a Dutch client, for example, will likely want an account with Dutch terms and conditions, that follows Dutch laws, regulated by the Dutch regulator, and comes with a Dutch IBAN.

“So that’s what we try to provide – a hyperlocal experience,” says Benady. “If we want embedded finance solutions to become really ubiquitous across Europe, we need hyperlocal solutions.”


This article was published in The Fintech Magazine Issue 29, Page 60-61

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