How an app is helping Eastern Bank bond with small businesses

Apps that focus on budgeting and cash flow abound for consumers, but the pickings are slimmer for small-business owners.

Eastern Bank in Boston has set out to offer entrepreneurs tools to help them manage their money and anticipate problems before they occur.

“A lot of big businesses have tools that are commercial grade,” said Ashley Nagle Eknaian, chief digital strategist at the $15.5 billion-asset bank and head of its incubator, Eastern Labs. “Consumers have fancy apps. But smaller and midsize businesses are this niche we wanted to develop more tools for.”

Ashley Nagle Eknaian, senior vice-president, chief digital strategist and head of incubator Eastern Labs at Eastern Bank.

Accounting software shares numbers, “but it’s not telling you what to do with that information,” said Ashley Nagle Eknaian, chief digital strategist at Eastern Bank and head of its incubator, Eastern Labs. “[Monit] is giving you next steps.”

In January 2019, the bank plumbed its small-business customer base with surveys and interviews to figure out what their needs were and how Eastern could help solve them. This research took six months and incorporated conversations with bankers, attorneys and certified public accountants.

These conversations shaped the idea for Monit, a fintech with an app of the same name. Monit is meant to be deployed by regional and community banks to their small-business customers. Although Eastern Labs helped shape the new company and its app, Monit is independent of the incubator.

“The Eastern small-business customers we developed Monit around wanted a guide to the most important things to focus on in their business from a financial perspective,” Sean Collins, a Monit co-founder and its head of development, said in an interview this fall. That includes the ability to forecast cash flow, rather than only looking backwards at business performance, and to review key performance indicators in one place — especially with plain English explanations of terms like “gross margin.”

“Some of the megabanks are starting to create their own proprietary products that do similar things, so this becomes an existential threat for some of these community banks,” Steve Dow, Monit’s CEO and another co-founder, said in an interview this fall. Most recently, Dow helped run Webster Financial’s business-banking practice. “This democratizes the playing field.”

For instance, U.S. Bancorp in Minneapolis lets small-business owners apply for loans through its app. Bank of America has enhanced the tools it offers small businesses. A number of fintechs aimed at small businesses combine checking accounts with cash-flow analysis and other tools.

Eastern in August became the first bank to roll out Monit to its customers. The goal is to strengthen relationships between Eastern’s existing clients and their bankers by supplying an intuitive tool that simplifies their finances, as well as by making recommendations based on data from Monit about overall balance sheet trends and credit and deposit activity.

Business owners can link Monit to their accounting software and scroll through their key numbers, such as revenue and expenses; view historical cash flow and cash-flow projections; receive alerts and notifications about potential issues ahead that necessitate action now; and test how different scenarios, such as splurging on a piece of equipment or hiring a new employee, will affect the business.

In November, Monit announced features for banks that give them a holistic view of their portfolio of customers with aggregated, anonymized data, such as the average number of credit and deposit relationships customers have with other banks and their top competitors. Banks can use this information to direct certain offers to customers based on their chosen criteria and send proactive alerts, such as encouraging business owners to discuss looming problems or a special money market rate with their bankers.

Eknaian has noticed that Monit’s features lead to more meaningful conversations between banker and client. By collecting data into a dashboard view, business owners can see if they are about to hit an uncharacteristic dip in cash flow. Monit may generate a notification from the bank that advises these owners to speak with their bankers now about getting a loan or line of credit. The business owner can click a button in the app to connect with their banker and share their financials; otherwise, the details of this offer and their financials remain private to the business owner.

“It brings that conversation to the forefront,” Eknaian said. “We heard from clients and bankers that access to credit is a big deal, and so is timing. We’re giving them more time to rectify a cash crunch if that will happen.”

Monit also provides banks with anonymized, aggregated information that can help them make targeted promotions through Monit. For example, the bank can send a high-yield bonus offer to businesses with high cash balances at other banks.

In the months since Eastern introduced Monit to its customers, customers have voiced appreciation that the service is mobile, that their data is cleanly and conveniently displayed, and that it’s easily navigable. One user recently told the bank that Monit took the best of their business metrics and laid the data out into a dashboard.

“You might see a number in your accounting software, but it’s not telling you what to do with that information,” Eknaian said. “This is giving you next steps.”

Eventually, Eastern hopes this tool can attract new customers as well.

Digital channels are an increasingly important part of small-business customer satisfaction, according to a 2020 study on small-business banking by J.D. Power. In 2020, 45% of small-business customers defined themselves as digital-centric, meaning they use mobile or online banking and have visited a branch no more than once in the past three months. In 2019, 33% of customers defined themselves this way.