If you are a budding entrepreneur trying your hand at business banking for the very first time, we totally feel you. Startup banking can drive anyone crazy, even the best of us.
For the longest time, traditional banks catered to the financial needs of the big giants in the business. A time when you had to stand in long queues just to open a bank account, and even longer ones to get any document vetted.
Which is why when neo banks first entered the scene, they were welcomed with open hands.
Banking challenges continue to haunt startup founders
There were close to 8000 startups in India in 2018 — the third highest in the world. Yet, most traditional banks, even today, have failed to truly adapt to the changing tides of the emerging Indian workforce.
And out of the host of things a new startup founder needs to worry about, you’d never expect banking to take away so much of your time.
Deepak Chaudhry, Founder, Pariksha rightly summed up his business banking experience –
“It’s exhausting.The waiting time is a pain and finding a line of credit, a major roadblock.”
Startups and SMEs across the globe are now looking for banking options that are more flexible, easy, adaptive and tailored to suit their needs.
If you are a first-time entrepreneur, be ready to grapple with the following
1. Opening a current account
With a traditional bank, opening a current account can be a huge hassle. You’ve to stand in those long queues, fill up hundreds of forms and wait for many days to finally gain access to one.
But the real blow here is the high minimum balance requirement that most current accounts these days, come with. Especially for startups like yours that need all the cash that they can find. The lack of instant gratification and huge waiting time do not sit well with any founder.
2. The endless list of required documents
A visit to any bank is almost synonymous with standing in line, waiting for your turn with all the documents that even remotely carry your name.
Especially when it comes to applying for a business current account — arranging for the KYC documents of all the directors, identity, address and entity proofs along with a million other forms, can be quite tiring.
As a startup, you’d not want an account that requires you to visit the bank branch and wait for long before you get to start using it.
3. Collecting and receiving payments
Most current accounts take around a month to become operational. Moreover, different customers have different preferences for making payments. As a startup, the more options you give, the faster you’d be able to bring the money home. To do this, many founders end up having to chase their payment gateways to make all the options available.
4. A new current account for every other thing
Most startups require multiple current accounts to differentiate between the expenditures incurred on marketing, payroll, operations etc. If yours is a startup with say 2 branches — that’s one more reason to get an additional current account.
5. Making vendor payouts
The worst part about being in a startup is having to manage vendor payouts especially those made in bulk. Manually entering everyone’s details to add them as a beneficiary and filling in multiple excel sheets one after the other, can be a huge pain. To add on to that, even if one payment fails, the whole transaction goes for a toss.
6. Hassle of tracking expenses
When you have multiple current accounts set up for different purposes, managing or overseeing their activity becomes difficult. Once the number of transactions rises, you’re left to blindly take a shot in the dark about whether you are overspending or not.
And as your startup grows, you end up hiring a team to oversee the spending activity. This calls for a better business banking solution that lets you track the inflows and outflows of all the accounts at one place.
7. A non-intuitive user interface
Another issue with traditional banks is that their interface and user experience is sub-par. This just piles on to the list of frustrations you already go through because of traditional banks.
8. Reconciling payments, chasing UTR numbers
One of the most frustrating aspects of the banking industry is its customer support. Each refund takes days on end to get cleared and that makes for a lousy service. Whenever you try to approach the bank officials to complain about the lack of flexibility in their services, you end up receiving the “it’s the darn rule” look.
9. Reconciling payments, chasing UTR numbers
Tracking UTR number for each transaction to figure out who has paid and who hasn’t is not something that you would like to work on. Especially when it’s done manually. But sadly, that’s how it is, that’s how it’s always been.
10. Difficulty in integrating banking APIs
Integrating banking into your business workflow can be quite a tiring task. More often than not, it requires a startup to collaborate with someone who provides this service. And sadly, most banks don’t.
In fact, most startups these days want an API driven banking platform that offers APIs for creating virtual bank account numbers, pull balances & statements, make NEFT / RTGS / IMPS payouts etc.
11. Signing up for a credit card
Getting a credit card for your startup, especially when you’re just starting out has always been a challenging task. Ergo, most startups end up using the Founder’s credit card to run the business – something that can be tricky as it often ends up mixing your personal and company spends.
Another hack that entrepreneurs end up resorting to involves making a huge deposit with the bank to get a credit card with a limit close to the deposit they just made.
Wondering how these challenges can be overcome?
The emergence of neo banks can be heralded as the pivotal point in startup banking.
With Asia’s first SME neo bank Open, you can start collecting and making payments instantly. It lets you integrate all your current accounts, thus letting you view them all on one super awesome dashboard. Adding on to that, it also offers automated bookkeeping, invoicing, and expense management that lets you do away with manual reconciliation.
If you’re a startup founder, you’ve all the reasons to want to leave your banking on autopilot.
It’s time you come ride the neo banking wave.