Banks, FinTech and Small-Business Finance – Interview With Janet Zablock, Head of Global Small Business, Visa

Small businesses present a strong community-building and economy-driving force in any nation. Countries that were able to establish the most business-friendly regulatory environments for setting up and running a business are often indicated as the most prosperous. The small business ecosystem represents 99.7% of all US businesses, making it a massive industry to support. In the past few years, financial institutions and FinTech startups came together to bring efficiency into small business operations and extend affordable financing options to support entrepreneurial talent.

We had the pleasure of speaking to Janet Zablock about banks, FinTech and the small business community. Janet is the Head of Global Small Business at Visa [Janet officially left Visa on May 1st of 2017], and currently, an Independent Board member at Nav Inc.

Elena Mesropyan: Janet, tell us about yourself – your background, your work with Visa, and now, an independent board member at Nav. Also, for the part of our audience that may not be familiar with Nav, please give a brief introduction of the company.

Janet Zablock: I’m passionate about the small business community, having started my career more than 30 years ago at McDonald’s Corporation, where Ray Kroc started the company as a small business. Recently, I spent more than 20 years managing commercial payment products for Visa, most recently, as Head of Global Small Business. I directed the development and implementation of the strategic vision for Visa Business products targeted at the small-business market segment. I led a team that coordinated all small-business credit and debit product efforts including product development, program management, and marketing. Additionally, I also managed Visa’s small-business credit and debit issuer services, which provide Visa financial institution and partner clients with insight and counsel on succeeding and growing in the small-business segment.

Small businesses are the backbone of the US economy, but it’s really hard to grow and run a small business. According to the SBA, roughly 600,000 small businesses close each year. That’s why I’m excited to help Nav in the quest to reduce the small business death rate in America. I believe in the work Nav is doing to bring data transparency to small business owners, helping them understand how they’re evaluated by lenders and creditors and giving them recommendations on how to improve their financial health; it can have a positive impact on millions of these folks. And I love that they’re simplifying it and making it easy. Nav gives small businesses access to personal and business credit reports, cash flow analysis and lender-neutral marketplace that uses this data to connect them to the right financing for their situation.

Elena Mesropyan: What does your appointment as an independent member of Nav’s board of directors mean for business relationships between Visa and Nav? How are they expected to develop in the years ahead?

Janet Zablock: I officially left Visa on May 1 of this year and I’m thrilled to be working with the Nav team that shares the same passion as I do in helping small businesses succeed. Utilizing my network to identify partners to scale distribution and services across financial institutions and other unique partners will help to reach more small businesses. The insights I have gained working with a broad spectrum of small businesses and their habits in using financial services such as credit, debit and merchant acceptance services will allow Nav to target more effectively and reach a broader distribution.

Elena Mesropyan: In the past few years it became clear that the financial services industry can truly prosper if financial institutions and FinTech startups join forces in mutually beneficial relationships. What particular segments do you see changing/being impacted the most as a result of such relationships?

Janet Zablock: You’re right — we’ve already seen substantial collaboration between financial institutions and FinTech startups. I believe the entire ecosystem of financial technology development is nearing a tipping point that will dramatically reshape small business lending over the next five years. Traditional lenders are feeling the pressure of using technology to improve their own processes and UX. We’ll see more and more underwriting transpire in advance of an application, located in environments where the data needed for risk assessment already resides. One of the reasons I wanted to work with Nav is they bring innovative technology combined with data that will help facilitate lending to small businesses.

Elena Mesropyan: How do financial institutions embrace relationships with FinTech startups? Why is it important? And what can each party drive from collaboration?

Janet Zablock: The initial fear that FinTech would disrupt the banks has dissipated, banks realize the power of collaboration and the importance of technology in empowering small businesses. FinTech startups can be agiler, adjust and focus on a specific audience. Larger institutions can provide stability to capital markets, make more affordable financing available, provide guidance, but often struggle with securing technology resources to create unique solutions for small business. Therefore, look to FinTech to partner to bring relevant solutions to small business versus a consumer service.

Consumers expect a frictionless UX these days – and usually on a mobile device. FinTech startups can help financial institutions provide technology that makes it more convenient and effective for consumers and small-business owners to manage their financial health. Small-business owners, especially, are looking for a partner they can trust to help them at every step along the way. Financial institutions have the brand name credibility and a relationship with business owners. Almost every business owner has a business DDA account; the trust is there. Financial institutions can help startups gain wide adoption of their technology.

This is important because it will enable more small-business owners to get affordable financing at the right time, making it possible to continue to run and grow their business without falling into a cash flow death spiral.

Elena Mesropyan: As a [former] Head of Global Small Business at Visa, how do you see small business financing changing as a result of FinTech innovation adoption by financial institutions? In the areas of acquisition, underwriting, data analytics, in particular.

Janet Zablock: Of the 28 million small businesses in the United States, over half faced financial challenges in the last year. FinTech is in a unique position to pull in data, make it digestible, and provide recommendations for business owners to get the right things done faster. Small business owners are experts at what they do but don’t have the time to be financial experts. FinTech is helping SMBs become better-qualified. Financial institutions can get better applicants and make more accurate and faster decisions, reducing underwriting costs.

Platforms that are attached to real-time, 360-degree data on the health of a business can make underwriting a real-time decision – not a snapshot in time. I believe the business loan application will die in the not-so-distant future. Loan approval becomes the consequence of healthy business operations. It connects all the data dots and takes care of last mile delivery, a pain point of underwriting a loan.

Platforms attached to this business operation data will also be able to start making proactive financing recommendations that intercept a business owner’s natural path to finding financing. For example, instead of walking into your bank, you’ll get a push notification a month earlier alerting you to the funding need, along with a few products you’re already approved for – just click a button to accept the loan.

Elena Mesropyan: In your opinion, what's the most important change coming to delivering financial services to small businesses – whether payments or financing – in the next 3-5 years?

Janet Zablock: As funny as it might seem, small-business owners remain the largest users of checks and also use Excel to manage their cash flow, which remains cumbersome and inefficient, especially when trying to secure a loan. Therefore, automation is key in the next few years, removing the friction of getting money and making it all much more transparent. It’s really a data problem. We can educate small-business owners on how to take care of their business health by using AI and business owner data. It lets us advise on what’s their next best action, with very little to no effort on the part of the small-business owner. This is more complex than it sounds because each small business is unique, with different variables like the business stage, credit profiles, vertical, location, etc. AI and machine learning can take all these scenarios into consideration to recommend the next best action while improving these recommendations over time. Small-business owners will look at it as a partnership and not just a one-off transaction. Handing over permission-based data is no longer a pain point; it opens doors. Here it is — help me optimize my profile so I can get the best credit and financing offers and ensure I can continue to sustain and grow my business.

Elena Mesropyan: Janet, thank you!

Want to share your vision on how FinTech and financial institutions bring innovation and efficiency to small business operations?

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