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Fintechs are using transparency, automation, and point-of-sale integration to aggressively pursue the short-term business-to-business loan industry. 

Traditional players like Barclays, HSBC, and Deutsche Bank that offer short-term loans to businesses need to focus on improving their customer experience to avoid the dynamics that have shaped the consumer buy-now-pay-later (BNPL) space.

A new crop of well-funded fintechs including Billie, Mondu, Insight Partners’ portfolio company Resolve, and Tranch are trying to tackle BNPL for business, encroaching on the territory of banking incumbents. Though each platform is a little different, they generally tout easy applications, greater transparency and flexibility, and faster cash flow as an improvement over typical short-term loans.  

“They just provide a far better end-to-end customer experience,” the leader of Bain’s global fintech business, Jeff Tijssen, told Insights Distilled.  

Traditional players need to focus on evolving their own processes to avoid losing potential customers.  

“Banks should really win in this space, but a lot of them have been asleep at the wheel and allowing these new players to grow their market share across the globe,” Tijssen added. “If you look at how the majority of banks provide short-term loans to their customers today, you typically end up with a ‘one size fits nobody’ approach.”  

The juxtaposition is familiar: Fintechs like Klarna and Affirm relied on sleek interfaces, flexibility, and customer ease to take market share from big banks that were slow to roll out their own consumer BNPL products. To prevent this trend from continuing for business loans, incumbents need to focus on how they can better help businesses with their cash-flow issues and other core needs, Tijssen said.