U.S. Bank’s Master(Card) Plan For Changing SMEs

The U.S. small business landscape is changing, and it can be attributed to a lot of factors: evolving financial technology, regulation, digitization of commerce and payments and the like.

But there’s one particular phenomenon behind the shifting small business population that U.S. Bank notices, according to the FI’s senior vice president of retail payment solutions, Cathi Stanton.

“We’ve been talking a lot internally about this phenomenon about how many Baby Boomers are going to be exiting their businesses,” she said in a recent interview with PYMNTS. “We see in the next five years or so that there is going to be a lot more changing of hands of businesses — that’s especially a time where you see that the way business is done changes.”

In response to this trend, U.S. Bank struck a partnership with MasterCard, giving the bank’s small business clients access to the MasterCard Business Network — an online portal of resources and tools for small business owners to manage their finances and operations.

According to Stanton, a digital toolkit is necessary for this incoming generation of small business owners.

“They want to become more mobile, more automated, more convenient,” she said, “and that’s delivered by innovation and innovative companies.”

The executive explained that linking with the MasterCard Business Network is also a response to SMEs’ demand for a one-stop shop of online financial management solutions. The MasterCard Business Network offers resources to mitigate risk, manage their accounting processes, access marketing services and get discounts on other business services.

But a major component to this venture is centered upon the small business credit card.

In connecting SMEs to the MasterCard Business Network, U.S. Bank also released three commercial cards for this customer base.

Why not just one? Stanton explained that small business owners today not only demand choice but require payment services that will meet their expectations.

“Small business owners are very busy — they’re pretty much 24/7,” she said. “They don’t want to have to change solutions because something’s not working for them, not convenient or not providing the value they thought it would.”

The three card products are each geared towards a different type of small business, too — like medium-sized firms working in the government or nonprofit sector, for instance.

As small business owners demand more customized financial services tailored to their specific needs, U.S. Bank is also looking to provide small businesses with the spend controls they need. SMEs can also log in to their online banking and gain insight into transaction behavior on their small business card.

“We’ve focused on payment controls for quite some time,” she said. “We did a lot of research about small businesses wanting controls for their business spend.”

According to Stanton, working with MasterCard is a “natural extension” of the bank’s existing small business spend management tool, FlexControl, a program that allows SMEs to repay card debts on a customized basis. With the MasterCard Business Network, small business customers can also log into that portal and define controls on their cards, like setting spending limits and restrictions for cards used by their employees.

Any small business needs to control cash flow. But with a new generation of business owners ready to take the wheel from their predecessors, Stanton noted that the way these SMEs will control their finances will become more digital and automated. Plus, she added, small business owners will become more demanding as to the types of services they can access.

“Every small business is different — different size, different stage, different type of industry — and they have different needs,” Stanton said. “Our goal is to understand what’s different about them but also what’s similar about them.”

It’s a goal likely not unique to U.S. Bank. With a new kind of small business owner, financial service providers will have to keep a watch on their demands and how FinTech innovation can meet them.

“Our goal is to offer the tools and resources that anticipate those changing needs and help small business owners get ahead so they can manage their business anytime, anywhere,” Stanton continued, “if it’s mobile, desktop or late at night. There’s definitely a growing need to make sure we’re staying on top of that trend.”