Why Wave is banking on small business

March 1, 2021
5 minutes read

At Wave, we live and breathe small business, and have a unique connection to entrepreneurs. From high fees to outdated business banking, we see their financial challenges every single day. And while there’s plenty of talk about the importance of small businesses, they rarely get the support they deserve.

Businesses with fewer than five employees make up a staggering 92% of U.S. businesses. Yet, while fintech innovation for consumers is growing at an incredible pace, smaller businesses don’t get the same level of attention. Big banks choose to put their investments towards either large businesses or consumer products where there is potential for larger returns. In this, we see a tremendous opportunity to focus on the small businesses others overlook.

Wave is breaking the bank

Traditional banks are expensive, archaic, and offer little more than a safer place to store your money than a mattress. At Wave, we know this from hearing the small business owners we serve. This is especially true for service-based businesses, who make up 91% of our customer base. Their needs are changing, but the response from traditional banks is not.

Small businesses pay an average of $450 in bank fees every year. To the big banks, that’s nothing. But for small businesses, $450 is a lot when every dollar could be the difference between hiring employees, paying bills, and even continuing to operate. And even after paying those fees, they don’t get much to show for it.

It all adds up to one opportunity: Small business banking is ripe for disruption, and we know there is a better way.

Small business banking is outdated

Traditional business bank accounts are unintelligent and don’t integrate well with other financial tools like bookkeeping software. As a result, business owners depend on things like Excel, or use third party solutions to connect their bank account and bookkeeping software, and moving money becomes a difficult and expensive task. Every single minute is critical to small business owners. They can’t afford to spend hours and hours comparing spreadsheets on their computer, printed out bank statements, and online transactions.

Small business banking

Setup is a struggle

Beyond that, we saw that when setting up their business banking, small business owners tend to do one of the following:

  1. Open an account with the same bank they use for personal banking.
  2. Mix their business and personal spending in one account.

Option one leaves them with an account that wasn’t built with their specific needs in mind. There may be functions or complexity that aren’t relevant to the type of business they run. People tend to use one bank for a long, long time, and which bank they use is often determined by the one their parents opened when they were young.

Option two makes it difficult to complete important tasks like understanding your business’ financial position and preparing to file taxes, and potentially leaves money on the table from possible deductions.

What if bookkeeping just happened?

Imagine you’re a business owner taking your client to lunch. You finish and pay. You need to keep your receipt. Then you need to save it somewhere, or if possible, upload it to your bookkeeping system. Then, you need to categorize it. And even after all that’s done, you still need to check your bank records and make sure it matches up.

But, what if when you paid the bill, that was the end of it? What if all the rest just took care of itself? What if bookkeeping just happened? You’d save a lot of time and effort, and be able to focus on that client, right?

That’s exactly what we had in mind when we created Wave Money, our free business bank account. That’s what gets people to say, “I get it! I understand how banking and bookkeeping work together!” The Wave Money bank account and Visa® Business Debit Card sits at the core of our suite of products and services, and enables each part to work together to create the absolute best experience for small business owners of all levels of experience.

Enabling money management mastery

Business owners want to be in control. They want to feel confident. But when it comes to managing their money, that’s a challenge. Even with all of the new options out there, it isn’t easy.

“Now, I might be using Wave for accounting, Gusto for payroll, OnDeck for capital," says Les Whiting, our Chief Financial Services Officer, "but for a small business owner to understand what’s happening with their business and get that data into one place is incredibly challenging.”

At Wave, banking that is simply integrated, connected, and easy to use with our entire suite of solutions removes the complexity and burden of financial management. When you make a transaction, it updates your Wave bookkeeping automatically, including reconciling your books. That includes everything from a purchase on our debit card to a payment on an invoice to a payroll run. There’s something of a snowball effect: The more Wave tools you use, the more they do for you.

And sure, pretty much every business wants to do more for their customers. That’s why our value proposition with the Wave Money bank account and debit card has to be significant: No fees, faster access to funds (payments processed through Wave get deposited within 30 seconds instead of two days), and bookkeeping is done automatically. Our solution is seamlessly integrated.

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Banking at our core requires ruthless prioritization

While the process of shifting our strategy to include banking has been very exciting, there have also been some extremely difficult decisions for us to make. The largest one is the need to cease offering our services outside of North America.

The reality is banking regulations are largely different from country to country. It simply would not be possible to roll out an integrated banking system worldwide, and with banking now being the core of our offering, we would not be able to continue providing these customers around the world with the level of service they deserve.

Adding value with our partners

Beyond Wave Money, we’ve also made it almost effortless for our customers to prepare and file their taxes. Instead of spending hours digging through records and comparing accounts, we collect all of their tax information and prepare it to be handed off seamlessly to Block Advisors, where customers can choose how they file. This allows us to add value for our customers all the way from getting paid to using that money to reporting their spending during tax season.

Going beyond bookkeeping

Wave has finally cracked the code on building a suite of software that helps owners run their small businesses, and has embedded financial services so deeply into these tools that they don’t even need to think about banking.

Beyond that, we’re continually searching for new ways to add value for our customers. To do so, we’re focusing on helping them discover more of our platform as a whole. The more Wave products and services our customers use, the more work Wave does for them. Plus, greater visibility into their full financial picture allows us to provide valuable insights on their business and predict things like cash flow.

All things considered, it comes back to small business owners. They’re getting crushed by the pandemic and the Amazons of the world. We don’t want to let that happen. So we’re going to continue doing every single thing we can to prevent it, and that starts with a bank account built specifically for these small business owners who shape our communities.

By Kirk Simpson

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

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