All too often, despite their potential as a revenue source for banks, small businesses end up relying on banking services and products designed for consumers. Now two well-known SME Finance Forum members are offering banks digital cash management and commercial payment tools specifically designed for their small-to-midsize customers.

Mastercard and Strands met at the Global SME Finance Forum in Beijing in 2016. Two years’ later, they went public with a partnership that will help small businesses to forecast cash flow, analyze finances and gain personalized, AI-powered recommendations on services from their banks.

The combined expertise of these two powerhouses promises to help small firms better understand and manage their finances and cash flow, something that has long hindered SME efficiency and growth. 

“Small businesses need to be able to manage today’s cash flow as well as predict tomorrow’s performance. Without these capabilities, small businesses are left to operate in the dark. Indeed, poor cash flow management is one of the top reasons why small businesses fail,” says Jay Singer, who leads the Global Small Business Segment at Mastercard.

“Sixty percent of SMEs place cash flow management as one of the top three priorities to help them secure their financial future,” says Strands CEO Erik Brieva.

Yet they are typically offered banking solutions designed with the retail customer in mind: “This partnership addresses the unique needs of small and medium businesses, and offers banks the opportunity to tap into one of their biggest potential sources of revenue.”

The Mastercard/Strands solution incorporates Mastercard’s digital payments technology into Strands’ business financial management suite. The new platform is designed to help businesses better manage accounts payable, accounts receivable, budgeting and other processes, and is powered by a layer of AI and machine-learning technology models.

Lázaro Campos, Co-founder of FinTechStage and former CEO of Swift, describes it as “a digital CFO for small and medium-sized companies."

Both companies’ banking clients will be able to offer the platform, and they are pitching the solution to current clients together. Campos sees the partnership as “an interesting development” in the market that should benefit SMEs around the world.

Mastercard’s technology enables businesses to track their use of small business credit cards, locate merchants that accept credit cards, as well as provide payment controls and loyalty rewards at select merchants and retailers.

Singer notes that these capabilities, tailored for small business needs, will help small businesses to operate more efficiently.

“Most small business owners didn’t enter their professions to become experts in accounting. They typically went down this path to pursue a passion. Our goal is to provide them with the tools that allow them to spend more time focusing on that passion, while also growing their business,” Singer said.

Brieva says that the service will help banks retain small-business clients.

“We expect this to be a high value-added service banks can offer to their customers,” Brieva said. “It can make business customers become more loyal, and look at the bank not just as a place to come when they need a loan, but as a true partner in their business.”

At a time when small businesses are looking for more help from their banks in managing cash flow, Strands and Mastercard see an opportunity to change the relationship that financial institutions have with SMEs.

“We want to make the banking experience more of a business partnership, so that small and medium businesses benefit from a full range of services beyond financial solutions. Banks are in the best position to do so,” says Albert Morales, VP Product Management at Strands.

Singer echoes this sentiment.

“Small businesses are increasingly looking to their banks for more than just a financial product,” Singer said. “This solution allows banks to address the holistic needs of their small business customers and serve as that trusted advisor.” 

Strands and Mastercard demonstrated the cash flow management tool at Finovate in San Francisco on 8 May.