{"id":132,"date":"2019-05-17T10:35:00","date_gmt":"2019-05-17T10:35:00","guid":{"rendered":"http:\/\/bankopen.com\/open-money-blog\/?p=132"},"modified":"2023-07-05T12:35:47","modified_gmt":"2023-07-05T07:05:47","slug":"11-startup-banking-challenges-that-entrepreneurs-fret-over","status":"publish","type":"post","link":"https:\/\/open.money\/blog\/11-startup-banking-challenges-that-entrepreneurs-fret-over\/","title":{"rendered":"11 Startup Banking Challenges that Entrepreneurs Fret Over"},"content":{"rendered":"\r\n

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.<\/p>\r\n\r\n\r\n\r\n

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\"Sad<\/a><\/p>\r\n<\/div>\r\n<\/figure>\r\n\r\n\r\n\r\n

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.<\/p>\r\n\r\n\r\n\r\n

This is why when neo banks\u00a0first entered<\/a><\/em> the scene, they were welcomed with open hands.<\/p>\r\n\r\n\r\n\r\n

Banking challenges continue to haunt startup founders<\/h4>\r\n\r\n\r\n\r\n

There were close to 8000 startups in India in 2018 \u2014 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.<\/p>\r\n\r\n\r\n\r\n

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\"Stat<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

And out of the host of things a new startup founder needs to worry about, you\u2019d never expect banking to take away so much of your time.<\/p>\r\n\r\n\r\n\r\n

Deepak Chaudhry, Founder, Pariksha rightly summed up his business banking experience –<\/p>\r\n\r\n\r\n\r\n

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\u201cIt\u2019s exhausting.The waiting time is a pain and finding a line of credit, a major roadblock.\u201d<\/em><\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Startups and SMEs across the globe are now looking for banking options that are more flexible, easy, adaptive and tailored to suit their needs.<\/p>\r\n\r\n\r\n\r\n

If you are a first-time entrepreneur, be ready to grapple with the following<\/p>\r\n\r\n\r\n\r\n

1. Opening a current account<\/strong><\/p>\r\n\r\n\r\n\r\n

With a traditional bank, opening a current account can be a huge hassle. You\u2019ve to stand in those long queues, fill up hundreds of forms and wait for many days to finally gain access to one.<\/p>\r\n\r\n\r\n\r\n

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.\u00a0The lack of instant gratification and huge waiting time does not sit well with any founder.<\/em><\/p>\r\n\r\n\r\n\r\n

2. The endless list of required documents<\/strong><\/p>\r\n\r\n\r\n\r\n

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.<\/p>\r\n\r\n\r\n\r\n

Especially when it comes to applying for a business current account \u2014 arranging for the KYC documents of all the directors, identity, address and entity proofs along with a million other forms, can be quite tiring.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

As a startup,\u00a0you\u2019d not want an account that requires you to visit the bank branch and wait for long before you get to start using it<\/em>.<\/p>\r\n\r\n\r\n\r\n

3. Collecting and receiving payments<\/strong><\/p>\r\n\r\n\r\n\r\n

Most current accounts take around a month to become operational<\/em>. Moreover, different customers have different preferences for making payments. As a startup, the more options you give, the faster you\u2019d 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.<\/p>\r\n\r\n\r\n\r\n

4. A new current account for every other thing<\/strong><\/p>\r\n\r\n\r\n\r\n

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 \u2014 that\u2019s one more reason to get an additional current account.<\/p>\r\n\r\n\r\n\r\n

5. Making vendor payouts<\/strong><\/p>\r\n\r\n\r\n\r\n

The worst part about being in a startup is having to manage vendor payouts in bulk<\/a>. Manually entering everyone\u2019s 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<\/em>.<\/p>\r\n\r\n\r\n\r\n

6. The hassle of tracking expenses<\/strong><\/p>\r\n\r\n\r\n\r\n

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\u2019re left to blindly take a shot in the dark about whether you are overspending or not.<\/p>\r\n\r\n\r\n\r\n

And\u00a0as your startup grows, you end up hiring a team to oversee the spending activity<\/em>. This calls for a better business banking solution that lets you track the inflows and outflows of all the accounts in one place.<\/p>\r\n\r\n\r\n\r\n

7. A non-intuitive user interface<\/strong><\/p>\r\n\r\n\r\n\r\n

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.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

8. Reconciling payments, chasing UTR numbers<\/strong><\/p>\r\n\r\n\r\n\r\n

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 \u201cit\u2019s the darn rule\u201d look.\u00a0<\/p>\r\n\r\n\r\n\r\n

9.<\/strong> Reconciling payments, chasing UTR numbers<\/strong><\/p>\r\n\r\n\r\n\r\n

Tracking the UTR number for each transaction to figure out who has paid and who hasn\u2019t is not something that you would like to work on. Especially when it’s done manually. But sadly, that\u2019s how it is, that\u2019s how it\u2019s always been.\u00a0<\/p>\r\n\r\n\r\n\r\n

10. Difficulty in integrating banking APIs<\/strong><\/p>\r\n\r\n\r\n\r\n

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\u2019t.\u00a0<\/p>\r\n\r\n\r\n\r\n

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.<\/p>\r\n\r\n\r\n\r\n

11. Signing up for a credit card<\/strong><\/p>\r\n\r\n\r\n\r\n

Getting a credit card for your startup, especially when you\u2019re just starting out has always been a challenging task. Ergo, most startups end up using the Founder\u2019s credit card to run the business – something that can be tricky as it often ends up mixing your personal and company spends.\u00a0<\/p>\r\n\r\n\r\n\r\n

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.<\/p>\r\n\r\n\r\n\r\n

Wondering how these challenges can be overcome?<\/p>\r\n\r\n\r\n\r\n

The emergence of neo banks can be heralded as the pivotal point in startup banking.<\/p>\r\n\r\n\r\n\r\n

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\"What<\/figure>\r\n<\/div>\r\n\r\n\r\n\r\n

With\u00a0Asia\u2019s first neo bank Open<\/em><\/a>, 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.<\/p>\r\n\r\n\r\n\r\n

If you\u2019re a startup founder, you\u2019ve all the reasons to want to leave your banking on autopilot.<\/p>\r\n\r\n\r\n\r\n

It\u2019s time you come to ride the neo banking wave.<\/em><\/strong><\/p>\r\n\r\n\r\n\r\n