1083. Insights: Why does running a business still feels harder than it should? With Sage

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1:57Welcome to FinTech Insider Insights. I'm Kate Moody, Customer Strategy Director at 11FS. Small and medium businesses have never had more software available to them. Yet for many businesses, running a business still involves too much manual work. Expenses sit in one system, accounting in another, payment somewhere else, leaving business owners switching between tools rather than focusing on growing their business. For years, software providers tried to solve this through integrations and bolt-on services, but increasingly, businesses expect experiences that feel connected, intuitive, and native.

2:29On this week's episode of FinTech Insider, in partnership with Sage, we're exploring why running a business still feels harder than it should and how embedded experiences are changing that. To help us unpack it, I'm joined by a great panel of guests. First, we welcome Gordon Stewart, SVP of Embedded Services at Sage. Gordon, big welcome to the show. Always nice to welcome new people. Tell us a little bit about yourself and and your role at Sage, please. Thanks very much, Kay, and thank you for having us. So as you said, I run our embedded services business here at Sage. So that's where we put our leading accounting, payroll and HR technology inside other people's platforms to be able to support small and immediate businesses where they operate.

3:07I've been with Sage for just under nine years in various product leadership roles and formerly at Hewlett-Packard as well. But great to be joined by you and the rest of the panel today. Awesome. Thank you for taking the time. Also joining us, we have Emma Campbell, Chief Banking Officer at One.io. Emma, also a big welcome to you. Would you mind telling our listeners a bit more about yourself and what you do at One.io, please? Of course. Thank you for having me as well, Kate. I'm very excited about this. Love the topic. Yeah, so as you said, I'm Chief Banking Officer at One. I'm also a director of our regulated and our non-regulated core businesses and entities.

3:41I spent my entire career in banking and fintech, kind of started out straight out of university. I was at Deutsche for just over a decade, and then kind of gradually moved into the fintech space. I joined PaySafe. I was there for about three years. I led their global banking and embedded finance strategy. And now I'm at one.io where, you know, as you said, I have the chief banking officer title. I run all of our banking and payment network partnerships. Anything that touches any type of currency, whether that be digital or fiat, falls within my remit and within my hands. So with that obviously comes a lot of different tech stacks, a lot of different software that we use.

4:20So really excited to go through the topics for today. Awesome. Yeah, really excited to hear your perspectives as well. And last, but absolutely not least, it's a very welcome return to the podcast for Sarah Kshansky, fintech consultant, analyst, former 11, and just generally awesome human. So great to see you here again, Sarah. Would you remind our listeners, please, if they've forgotten who you are and what you do? Well, thank you for the very warm welcome. I don't know if there's anybody out there who doesn't know who I am at this point, but I will go over it very, very briefly. So my name is Sarah Kuczynski.

4:54I'm an authentic analyst and consultant. And what that means is I work with organizations, large and small, to help them understand the market and the landscape in which they operate, help them understand what these opportunities look like within that landscape and how they can best capitalize on it. Awesome. Well, yeah, excited to have such a great panel. Let's dive in. Okay, so we're going to start off, I suppose, by having a think about why business software is still creating friction rather than removing it. Businesses, it feels like at least have more software than ever before, yet many small and medium businesses or SMBs, as we like to refer to them, would quite often argue that running a business hasn't actually become much easier.

5:33Gordon, obviously, Sage works with millions of SMBs around the world. What are you hearing firsthand from the businesses that you're serving? Yeah, so I think what we're really hearing is that you're right, the access to technology isn't the problem. It's how it all talks to each other. We recently did a survey, we surveyed a couple of thousand businesses across Europe. And I think on average, they had 50 different applications they used to run their business, which just feels, yeah, you're right, Kate, to make that face, that feels obscene. And I think the challenge that we're hearing from both those businesses and the accountants who support them is a real challenge about how do you get that all the data in those different systems talking to each other?

6:12How do you make sure that, you know, the accounting capabilities are seamlessly integrated with, you know, the banking position so you can get accurate cash flow? How can you look at things in terms of we know that businesses often have problems around getting paid on time? How can systems link together to work better to solve that problem? we know that SMBs have challenges around accessing finance to grow. I hear quite a lot of people talk about, you know, accessing finance to, you know, run payroll. These aren't the problems we hear. It's all about growth. And we know for all the economies that certainly we operate in its age around the world that, you know, growth is the number one thing that we're trying to drive.

6:47And because SMBs make up such a large proportion of the businesses in the economy, if we don't enable SMBs to grow, then that's a problem for all of our economies. and I think it's you know it's this this app switching this kind of toggling between apps which is the problem and that's why we've tried to do something at Sage to solve that is instead of forcing businesses to have another app or a different app to do their accounting or to do their tax submission how about we just take our technology and put it in the applications that they're already using to try and solve some of these kind of pain points because if I have to hear another business who's struggling to you know to pull all these numbers together and all this data and spending so much time doing that you know and it isn't during the night to five they're doing it they're doing this before work they're doing it into the late hours and that's not why people got into running a business they got into it to to you know be a florist to be a mechanic to be a uh you know timber manufacturer whatever is their passion is so i think it's a responsibility of kind of all technology companies not only to provide that underlying capability but to make sure it's fully and properly integrated and embedded together so it actually works yeah emma what about you how do you how do you see kind of this problem space shaping up.

7:53Yeah, I fully agree with Gordon. You know, there is so much software out there. I think, you know, the world of tech has evolved so much over the last 10 to 15 years that that isn't the crux of the problem. The problem that we see and, you know, particularly within One.io, like we see it on a daily basis, is the disconnected software. You know, the right hand isn't speaking to the left hand. Having to, as Gordon said, toggle into, you know, 20, 30, 40 different tools on a daily basis for your cash positions, trying to net off at the end of the day, you know, particularly within the regulated payment space, you know, you have safeguarding end user funds and all of that type of thing that comes with it, reporting requirements that are far greater than we would have seen in previous years.

8:38And with that comes enhanced tools that you need to be able to complete those tasks. So it's just having everything speak to one another to make, you know, our CFO's life easier, our treasurer's life easier, my life easier, the board's life easier is, you know, kind of where we want to end up. And I think that is the end goal with a lot of tech and software companies now is how we make everything work seamlessly together rather than so disconnected. Yeah. Yeah. Sarah, why do you think we've got to this point? Yeah, I mean, I think I have a slightly different perspective on this because broadly I agree that you kind of want everything in one place and so you kind of have one login for everything and you can kind of, you know, just know that that's the place you go to when you're trying to use whatever software it is related to your finances.

9:25But I do think that it kind of depends on the decision maker in question. So I was looking at some research from Visa which said that next gen, and I'm doing air quotes, decision makers, so those who are under 35, actually care less about standardization and integration and more about having a high-quality tool. And when they were spoken to, they said, yeah, we'd rather have four different tools, each of which is the right tool for me, than a substandard tool across the board. So I think it kind of depends who you're speaking to, I think it depends the business they're in. But I think that speaks to the question you actually asked me, which is how have we got to this point?

10:02And I think it's because people who run small businesses are very, very good at spotting very specific problems that they need solving. So they're the ones who are likely to then go on and develop a tool to solve that very specific problem. But that then leads them with 17 very specific tools. So it's got to be a balance between actually, you know, one size fits no one. We know that. So how do you make sure that you're introducing tools that solve specific problems at a high quality whilst also maintaining that ease of, oh, my God, I've got 17 different logins. and has anybody seen that security box that generates the code and, you know, this one doesn't work on a Mac, the Mac one only works on a PC?

10:38Because we've all been there and that is incredibly frustrating. I mean, it's difficult enough to get this laptop to switch between Zoom, Teams and Google Meets, for goodness sake. And I think, Sarah, if I may, I think you're totally right in terms of it definitely varies by the type of business and the type of tools that they want. And I think certainly in the research that we've done is that a lot of very small businesses do really, and would actually pay more to have lots of things together in one place with the tool they trust but actually if they can have the the leading technology all working together rather than someone who you know isn't in a particular discipline building a bit of software i think you're totally right that can be can be very dangerous but also we see that especially for the more kind of complex or kind of larger smbs that were actually like operating inside an erp system for example it's almost about this what's the system primacy and how do they all talk together because you're right there is the challenge of login there is the challenge of actually just a single process, but also it's then how does that data all kind of seamlessly come together so that your payments do reconcile into your ledger, your data is structured so that when you speak to your accountant, they're not then going through sifting through receipts and sifting through kind of all sorts of information.

11:41It's about how do we bring all that information together as well as some of the practical logistics of the kind of toggling which we spoke about before. Yeah, I think maybe one of that too is the scalability of it. You know, you can have 17 small different applications, you know, that work for that one specific niche problem. and that is perfect up until a certain point where your business needs to get to that next stage. So being able to scale 17 different systems, if you're going to expand into all corners of the world, it's not feasible. But if your business and your SMB business wants to maintain in its current growth trajectory, it doesn't want to scale to all corners of the globe, then utilizing those 17 tools makes sense.

12:22Yeah, no, absolutely. And I think, as I said, Gordon, beyond like obviously we've talked about it being inconvenient right like like losing logins and stuff but i assume there's an impact just beyond pure convenience right to what impact is having this disconnected system these disconnected workflows have on business beyond just convenience do you think yeah so i think it is um it is the time sap i think one thing which is which is a huge thing which i think goes beyond convenience it's genuinely the time it takes to move data between you know different systems if you don't have them integrated i think also one of the things I kind of personally worry about when you speak to SMBs is that the burden of the bill that comes for all these tools as well.

12:57And if you look at also what's now happening with the emergence of the hyperscalers and LLMs and all these different AI interfaces, which can do amazing things with data, pulling them together. The thing that I'm not really seeing about how that helps SMBs is actually it's another subscription you've got to pay for. So if you've already got 58 applications or 17 applications, whatever the number is, and you're paying for them all, suddenly then to have another payment you're making on top of that just to have something which pulls it all together which we know also still isn't classified as being accurate which when you're in accounting or payments like 99 % right is still wrong um I think there's something here which is actually how does the how do SMBs benefit from economies of scale of this about having you know the right tools that actually still perform the job but they're not having to continually pay more and more um because you know like economies that we live in the price of everything is going up, not only from, you know, the cost of goods, the cost of services, but actually, you know, some of the, you know, national insurance here in the UK that's changed fairly recently.

13:53These are all pressures on business and wouldn't be great if actually not only the technology worked, but we'd ease some of that financial pressure on businesses again, so they can go and invest and they can go and grow. I think there's a huge piece which is really important there for us to think about. Sorry, Kate, I was just going to add to that and say that I completely agree with Gordon. I think there's a certain amount, again, of depending on the size of the business, frustration that they're having to pay for features they don't want or need. So, you know, I don't want half of that. I just want this half, but I can't do that.

14:21So how do you make it so that I've got this platform that I can have, you know, select the features that are relevant to me? Because, you know, when you're big enough, yeah, maybe you might need them all. But I think that smaller end as well, I certainly see a lot of frustration for people who, if you're doing everything on your own, if you're a freelancer, if you're like me, then you just manage it, right? You don't need zero. Like, you can manage it. You don't need Sage. You can just do the bits and pieces. When you get to sort of like, you know, 50 to 100 people, yes, you need something a bit more complicated.

14:47But do you really need the product that are then built for like 1 ,000 people? And I think there is, I think what we're starting to see is people understanding that and making platforms where everything is in one place, but you can toggle on and toggle off the features you need. Which especially to Gordon's point, if some of these features and functionalities are using tokens and you don't know what your token bill is going to be by the time you finish using that feature. That's hugely stressful for a small business. Yeah, and I completely agree, Sarah. I think that's a really critical way of thinking about this as well.

15:18I think one thing that I feel is both a positive and a negative of where we've got to in the sector generally as well in terms of small businesses, I think we've seen a bit more of a growth or a bit more recognition of the fact that businesses in different industry verticals have different requirements of financial services as well. And so we start to see kind of a growth of, you know, sort of more industry-specific, you know, payment solutions, accounting solutions, all that sort of stuff. So again, on one hand, I think that's great because it helps these businesses, to Sarah's point, to kind of get access to like particular products that solve particular problems.

15:53But again, I wonder in terms of your point going about growth, if that also potentially makes it harder for these businesses to pivot, to adjust, to add on, you know, new adjacent verticals to their business. So again, I don't really have a super insightful point to it, but I wonder if that's also contributing to some of the challenges that we're seeing where we've got so many tools, areas of great specialism, areas where we're getting loads of products that not necessarily everyone needs. It just feels like it's a really positive change, but also one that is creating maybe just as many problems as it's solving.

16:24And I think as Sarah was saying before, there is this, you know, I speak to a lot of businesses in my role, not only businesses who are customers of Sage, but actually an ecosystem. And what we found is a lot of businesses stop because there was a problem that needed to be solved and someone hadn't solved it for them. So I spoke to a hospitality vertical SaaS business a couple of months ago based out in Spain. This guy, his parents ran a hotel in Switzerland and he kind of came in to help them kind of one summer and realized they were still doing everything on pen and paper. And he went to, you know, he hit the Google search and go to look for, okay, what software can I help my mom and dad run the hotel?

17:03And he didn't see anything that actually met their needs. So he just went and built it because he was a computer science grad. And all of a sudden, then his parents then started to tell other hoteliers about this software. And all of a sudden, he's kind of got this business. So I think a lot of it is born out of genuine opportunity and kind of challenges or kind of gaps in the market. But then it's like, okay, but then as he starts to expand that solution, well, if he wants to bring payments in, is he going to bring payment? Is he going to build a payments business? like that i wouldn't advise that you know i mean there's so many specialists in the markets and it's like well how would you bring that together and i think this is where we're starting to see this real kind of embedded nature which is we can have a plug-in to some of the leading payments companies or actually you can start to embed their capabilities into your platform you can use the power of their brand their trust because who's going to trust this guy is payments feature but actually if you've got a logo that's recognized that then suddenly gives it the credibility and then suddenly everything does start working together but definitely i see these things are born out of genuine problems in the economy that can be solved in a digital way.

18:00But obviously the end game isn't necessarily always thought through when someone's having that kind of light bulb moment, which is, okay, well, I need to build some software to help my mom and dad run their hotel. And then suddenly it's a business a couple of years later, you know. I think maybe on Kate, what you said, consumer choice is far greater today than it ever has been. You know, you're sitting on the tube, you know, you're on the district line in London, and you see 10, 15 different adverts for all of the new, you know, the consumer and retail products that are available to SMBs and for, you know, sole traders and things like that.

18:33But choice is very overwhelming. And to try and make the best choice for you, your staff, your employees, and your business is really difficult to do. And unless you have, you know, the knowledge and the know-how within the industry, you know, picking a provider, again, back to Gordon's point, the cost of integrating with multiple providers. When you're at a very small startup stage or at the beginning of your growth, you do not know who to go to. Everybody looks like they offer the same thing on paper, but it's only when you get into the onboarding, the integration, you can see the differences.

19:07And at that point, you can be a little too far down the road. You may have already invested time, money. So it's very important that consumers and SMBs are aware of the different types of features of solutions that are in the market today. But yeah, consumer choice is vast now in comparison to 20 years ago. I think there's also a point to be made there about how easy it is to switch. So if you've made a wrong decision, or even if the decision, if what you had when you were 10 people is now longer valid when you're 50 people, because as you say, you're scaling and the solution you picked originally can't scale with you.

19:46it's incredibly difficult to move between these platforms sometimes because you're so embedded I think people you know as consumers we're used to being able to switch right in the UK the government makes it incentivizes me to switch my bank account so if I then as a as a small business who's got that mentality because obviously people who own and run small businesses and work in small businesses are also consumers I think there's this sort of lag sometimes with the platforms and kind of the unfairness people feel when they're kind of locked in and I think that kind of is built into this kind of, yeah, as I say, it's like, I think it's the fact that your consumer mindset carries through to your business mindset.

20:20So it's like, well, if I can do this in my personal life, why can't I do this in my professional life? And that can cause frustration. And, you know, we've just seen some of the big telco companies in the UK find millions for not letting people leave. So I think there's a, obviously you don't want your customers to leave, so you have to make them happy so they don't leave. But the question is there about kind of how do you cope with that mentality coming from your customers? I was just going to say, you know, when it comes, if you do want to switch, I think a lot of the high street banks for, you know, businesses are, you know, here's 50 quid for referral for you and your other, you know, business SMB friends, or maybe 100 quid, I'm not too sure now.

20:58But you kind of do forget that you also have to update all of your invoicing, you have to update all of your billing systems, you have to pre-notify your client base you have to let you know everybody in your ecosystem know that you have change provider and that alone is is very time consuming and again for a smaller a smaller company that will take up a lot of resourcing um on their side that they may want to put into something else and that's a great opportunity for a platform to help with that service right to build that into your service is that we will help you switch we will help you manage some of that journey because we know it's painful.

21:33Absolutely. Yeah. I think the other thing I've seen when I've been interviewing small businesses or people working in small businesses and past projects with 11FS is that sometimes, maybe intentionally or unintentionally as well, people realize that the fact that they are, if you think about maybe an accounts payable function or a finance team for a small business, sometimes those individuals realize that the fact that they are the only person that can connect all these things together like is the way that they are creating value for the business so I completely agree there's lots of like practical barriers to switching to the software that you need as well but there can also sometimes be human and cultural barriers as well where you've got one person that's like not power hungry that's the wrong word but they kind of that they that's their kind of role every day is kind of stitching all these things together and helping the business to keep ticking over so um so yeah I think there's so many there's so many dynamics to this um i'm keen to come back obviously like pretty much every single episode of fintech insider whether that's news or insights now we spend a lot of time talking about ai but it's obviously hard to avoid it because it's such an enormous um influence on all the changes we're seeing this space um gordon obviously i'm sure you guys at sage are investing heavily in ai um how is that going to do you think that's going to make a big difference in this space is that going to kind of correct some of these issues that we've seen?

22:51Yeah, so I think, yeah, so we've been investing in AI and machine learning for, well, as long as I've been in the business, which was actually nine years. And I think we never, we probably didn't do a very good job of talking about it before the hype. But there were certain parts of certainly the accounting and financial management workflows that massively benefit from the kind of big data machine learning, which you can do in terms of categorization of transactions, in terms of anomaly detection. um obviously more recently we've um kind of deployed a kind of generative and chat ai like interface within our products to be able to help um smb kind of access the information which is sitting in the platform but i think i think the risk is really the difference between and this comes back to emma's point from earlier the difference between the kind of um uh consumer use cases of um conversational ai and actually what can happen within a business because i think is, you know, vast majority of people have now experimented with some form of AI, you know, kind of choose your brand that you talk to.

23:48And, you know, it's hugely caveat that often the information which is resurfaced might not be accurate, might need to double check it. But when you get into a financial system, as I said before, that's not good enough. Like if you get your numbers wrong, then you can get into a lot of trouble. And ultimately, the business owner is the, you know, the CFO is the one who's kind of liable at the end of the day. So we've been really really clear on how we wanted to use our technology which is actually trained on our data trained on the kind of models that we have very specific to our domain and accounting and hr and payroll so there isn't generic information it's actually being surfaced on kind of real data and customer dates to help kind of build those insights but i think it's something that we need to be we need to be really careful with and there's a huge kind of trust element that becomes extremely important because um as the old saying goes you know um you know uh kind of trust is built over a very long time, but can be lost in an instant.

24:39And I think this is the most important thing is trusted AI will become the real currency, not just because AI is everywhere now, the interfaces that you've got, like I said, there's probably not many people who've got access to a computer or a smartphone who haven't, you know, experienced it in some way. We saw Google's recent announcement that they're changing search from kind of, you know, historical search to search through Gemini, like the world has already changed. And it's really about, yeah, how do you use that technology in a safe and trusted way and actually which is something adding true value because um again i've seen an awful lot of examples of you know ai accountants ai agents for accounting and actually when you get to the the detail of it it's not really making any difference and it might be sucking data from lots of different places but still isn't given the right accurate information which an in-house accountant or bootkeeper would use or actually help solve some of the problems like actually how do you pay your tax bill how do you put money aside to make sure you can pay attacks build real problems for businesses that they're seeing, you know?

25:33Yeah, absolutely. Okay, well, I'm fairly confident in this half we've explored why disconnected software continues to create friction for SMBs. In the second half, I'm sure we'll be talking about AI a lot more as we'll be looking at what replaces our model and why native embedded experiences could reshape how businesses interact with financial services. It's all coming up after this quick break.

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