2019: WePay’s Year in Integrated Banking
One of the biggest payments trends in 2019 was the push from tech companies to offer traditional banking services to their customers. Google announced its plan to offer checking accounts, further expanding its financial and payments offerings. Apple enabled consumers to apply for their recently released Apple Card straight from their iPhone, and Uber debuted its Uber Money division whose first initiative was seamlessly settling funds to drivers via mobile bank accounts.
While these companies captured the attention of the media in 2019, the trend of integrated banking has seeped down to even the most niche software platforms, as the benefits are universal for Software-as-a-Service (SaaS) companies of all sizes and industries.
SaaS platforms are uniquely positioned to deliver these banking products compared to traditional brick-and-mortar retail banks. Their distinct advantages closely align to SaaS platforms’ goals; including monetizing transactions, providing a seamless user experience, and enhancing platform stickiness by deepening their relationship with merchants.
Why integrated payments?
As SaaS platforms capture an increasing share of their target market, they are seeking new frontiers to continue their growth. With integrated payments – a subset of integrated banking that automates the capture, settlement, and reconciliation experiences within an application – these platforms can immediately monetize their transactions, adding another layer of revenue to complement their core service fee.
While revenues on individual transactions are tiny, this additional layer effortlessly scales as the platform and its user base grows, creating a major impact on overall revenue and expanding their market opportunity.
After Shopify extended its revenue mix to include payments, for example, it became the fastest-growing portion of its portfolio. Merchant Solutions now accounts for 61% of its total revenue, growing 63% to $210.3 million while subscription services – its core business – only makes up 31% of revenue.
Bolstering the bottom line through payments is only the beginning for integrated banking.
Integrated payments make it possible for platforms to track data on thousands of business transactions. The platform can enhance its overall customer experience with this data by making personalized, informed financial offerings to their SMB customers, including loans, credit cards, cash advances, and even faster deposits to their bank accounts. These products ease common SMB pain points that can threaten their livelihood.
For example, a contractor is likely to experience a cash flow shortage when he pays a subcontractor prior to receiving payment from his client. But with the data collected from integrated payments, the software platform he uses to run his business can save his business. Using data and his business’s financial history, the contractor’s software platform can predict his cash flow constraint ahead of time and offer an in-app cash advance when he needs it, saving his business and retaining a customer!
Leading the charge to a complete integrated banking experience
Adding integrated banking functionality is an easy choice for SaaS platforms, but the implementation is more difficult than many might expect. Engineering complexity, banking regulation, and the government’s increasingly watchful eye over BigTech has made providing these services to SMBs complicated.
It has posed a difficult strategic question for platform executives: should they heavily invest time, capital, and resources into building a new line of business with the hope of providing a comprehensive solution for their SMBs? Or should they focus those same resources on strengthening their core functionality in their vertical?
Throughout our history, WePay has striven to solve this dilemma. We have offered easy integrations to platforms for years, but in 2019, we doubled down on our mission by completing integration with JPMorgan Chase. Now we are able to provide even greater value to our partners and their merchants.
SaaS platforms can continue to use our APIs to monetize their payments and customize an enhanced user experience, but now that we are a part of the largest bank in the United States, our partners have direct access to Chase’s broader product suite.
As part of a full service consumer, commercial, and wholesale bank, we can launch industry leading products like Same-Day Deposits and Weekend and Holiday Deposits at no additional cost. Launched in 2019, we offer SMBs same-day access to their cash at no additional cost while similar products require a fee up to 1.5% per deposit. Having visibility into both ends of a transaction mitigates risk and leads to direct cost savings for small businesses.
Last year, we also debuted products that allow SMBs to digitally open a Chase business bank account directly on a partner’s website. Like our contractor example, this initiative gives small businesses the tools they need to grow their business within the software platform they use to manage their business. This unique value positions WePay at the forefront of integrated banking, where innovative functionality is simply combining Chase’s legacy of SMB services and business banking products with WePay’s fintech expertise.
Our newly launched suite of products – Link, Clear, and Core – reflects this. WePay makes it easy for any platform, regardless of size, resource constraints, or strategic appetite, to turn payments and banking into a profitable line of business that grows as they continue to scale. Whether they want to quickly monetize payments, have their own white label payments brand, or become a full-fledged payment facilitator themselves, we have a solution that fits their needs.
Looking forward to 2020 and beyond
2019 laid the foundation for the future of integrated banking, and we fully expect its evolution in SaaS platforms to continue to take shape in 2020 and beyond.
Despite growing concerns of regulation and government intervention in the fintech industry, WePay’s ability to offer in-app financial services remains strong. Our payments expertise and the distribution of JPMorgan Chase give us a unique opportunity to help SaaS platforms achieve their revenue goals, enhance the SMB experience, and focus on advancing their software’s core functionality.
WePay believes that what made a bank successful in the past, won’t make it successful in the 21st century. In the same manner, what has previously made SaaS companies flourish, won’t continue to drive their growth in the years to come. WePay is dedicated to being a catalyst for SaaS platforms’ future prosperity, first through payments then with comprehensive integrated banking.