From the Influencers

Technology Bridging Gaps for Small Businesses

May 03, 2016

Amazon did it with books, then Apple did it with music, then Netflix did it with movies and the entertainment industry has never been the same. It’s not a coincidence that each of these companies moved through a similar progression to disrupt their respective segments of entertainment. It’s a roadmap, a battle plan, a two-phase process of industry transformation and it’s happening in financial services in a way that is already reshaping the way small business get financed. To see what’s coming, let’s have a look at how it’s happened in the past:


Phase 1: Do it online. Remove the necessity of geography and the costs of bricks and mortar, measure everything you can about your customer and personalize their experience, gain complete control of pricing power and be very fast.

Phase 2: Using what you’ve learned from phase 1, revolutionize the product so much that your competitors have no choice but to become your customers and your customers can’t tell the difference between the experience you’ve created and the product they’re consuming. The $25 hardcover becomes the $8 kindle download, the $14 album becomes the $0.99 iTune, and the $20 DVD or $12 movie ticket becomes $8/mo. for unlimited personalized binge-watching in your living room. First the rules change, then the product changes, then the game changes.

The most important outcome of this transformation, and also what drives it, is that the consumer wins.

This process is an intrinsic part of what the Internet makes possible so it’s not surprising that many of the big winners across industries are in some version of this progression—Google did it with information and Uber is doing it with rides. Notably, in every case, the product being bought or sold isn’t owned by the platform itself, but the transformation of the experience captures the customer and makes the product indistinguishable from the experience the platform creates. Financial services is going through its own version of this transformation as evidenced by the increasing abundance of emerging “fintech” players.

The Fintech revolution is without question still in Phase 1 and has a long way to go.  Thusfar, it’s been about leveraging the power, scale, speed and the freedom of the Internet and mobile to take financial services online. Branchless lending? Check.  Augmented data and personalized experience? Check. Speed and pricing? Check.  People are borrowing, lending, investing and trading online. However, it won’t be until we move into Phase 2 that we can say with confidence that the consumer is winning.

The shift to Phase 2 happens when new products are developed based on the unique knowledge acquired through Phase 1. This is where it will get really interesting for small business. A host of opportunities for product development have been created by the technologies that Fintech platforms have developed to make user acquisition, decision-making, and distribution more efficient. For example, integration into the accounting software of a customer allows a platform the ability to see the P&L of the SME in real-time. This certainly allows for better decision making but it also paves the way for the creation of custom financial products specifically aligned with the challenges and opportunities that a small business faces.  We’re just at the beginning of seeing what creative Fintech entrepreneurs will do to develop these opportunities, but it is undoubtedly starting to happen.

At kountable, we find ourselves among a growing number of these players. We originally built our mobile application to find and evaluate the types of entrepreneurs that are a fit for our platform and quickly came to realize that we could leverage the direct connection afforded by the app to monitor and manage the complexity of the global supply chain. Specifically, we’re able to leverage the direct link between our servicing team and our network of international small businesses to evaluate global trading opportunities within the supply chain of multinational corporations, governments, schools and hospitals. We then use an innovative financing solution that allows the SME to capture opportunities at greater speed and at higher volume than they can without us. They build capability, confidence, and reputation in their local markets because we leverage our collective balance sheets to help them grow. In effect, we’re making trade finance tools that were recently only available to much larger players available to small businesses.

That innovation came directly from what we learned about their challenges, and from the evolution of technologies that, with a little ingenuity, enable us to profitably apply tried and true financing strategies at the size and velocity that small businesses require. It’s a market that is ripe with opportunity, so small businesses can expect to see many more innovations to address their unique financial needs on the horizon.

Chris Hale is the founder and CEO of kountable, Inc., a San Francisco-based start-up that combines data science, social capital, and proven financial instruments to provide highly-scalable financing solutions to underserved “missing middle” entrepreneurs in developing countries. Kountable creates a low-friction, cloud-based bridge between investors in developed countries and the massive opportunity to finance the most promising, driven, established and well-networked entrepreneurs in emerging economies.

Hale concurrently serves as the COO of Perigon Wealth Management, an RIA serving approximately 100 families and managing almost $1 billion in assets.  Over the last two years, under his leadership, Perigon Wealth Management has doubled its headcount, grown its assets under management almost six-fold, and in 2014, was named one of the 50 fastest growing RIAs in the country.




Edited by Stefania Viscusi

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