January 30, 2023

Eastern Bank idea leads to small-business money management app

Monit, a fintech company that stemmed from an idea hatched at Eastern Bank in Boston, has launched a namesake app to help small-business owners analyze and predict cash flow, revenue and profitability.

Rather than charging small-business owners to use it, the app will be delivered through community and regional banks. Monit makes money through software-as-a-service revenue agreements with banks.

This launch is one example of a broader trend in which banks of all sizes are trying to provide better technology to small businesses, in the hopes of attracting and strengthening relationships with them. Apps like Monit’s not only can tie a small business more tightly to a bank; they can also provide useful data about small businesses and help small and midsize banks compete with larger rivals.

“Monit solves a problem for banks, which have been increasingly challenged with meeting the needs of small businesses,” said Sean Collins, a Monit co-founder and its head of development.

Eastern Bank, which is planning to go public this year, is the first institution to offer Monit. A second bank partnership is planned for this year. Monit says it is also in discussions with 10 banks, ranging in size from $1 billion to $150 billion in assets.

Monit is the second fintech to start life in Eastern’s technology incubator, Eastern Labs. The unit was founded in 2014, when the bank hired a team of fintech entrepreneurs to work alongside bankers to collaborate on small-business lending and sales software.

In 2017, the bank spun the group out as a fintech called Numerated to continue developing the technology and sell it to other banks. Dan O’Malley, the original leader of Eastern Labs, is now CEO of Numerated. The company recently came out with software for handling Paycheck Protection Program loans that was used by nearly 100 banks.

Sean Collins, left, is a co-founder and head of development at Monit. Steve Dow is Monit's CEO and another co-founder.

By co-designing Monit with small-business owners, co-founders Sean Collins (left) and Steve Dow (right) learned that they want to see critical details about their businesses in one place and forecast changes in cash flow.

Monit’s software is designed to help small-business owners stay on top of their financials and forecast their cash flow with simple graphics, intuitive features and in plain English.

The team worked with business owners and bankers in developing the app. They learned that business owners want to see critical details concerning their businesses in one place and know where they need to take action. They want a historical look at their finances as well as a peek at what’s around the corner.

Setup is meant to be straightforward: After users connect their Monit account to their accounting software, such as QuickBooks, Monit will chart their historical and projected cash positions.

Users can scroll through their Key Numbers, which are broken down by headings such as “Money Owed to Me” and “Money I Owe” rather than financial jargon terms such as accounts receivable or accounts payable. The Insights tab contains recommendations and flags developments that require attention. Under Events, owners can get an idea of how actions such as making a big purchase or hiring a new employee will affect cash flow.

Monit can also detect whether users have taken out PPP loans, estimate how much is forgivable and guide them through obtaining forgiveness.

Steve Dow, Monit’s CEO and another co-founder, came from Webster Bank in Waterbury, Conn., where he most recently helped run its business-banking practice.

“I got a front-row seat to the issues facing small businesses dealing with their bank and how bankers serve their small-business customers,” Dow said. One major sticking point: Small-business owners would rather pursue their passions than deal with finances and accounting.

“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,” Dow said. “This democratizes the playing field.”

More specifically, “if they offer this at scale to small-business customers, they will engender goodwill and have some good technology in their hands,” Dow said. “On the back end, we can share data in an anonymous way about their customer base that they wouldn’t otherwise have access to.”

For a limited time, Monit will offer its app directly and free to small businesses hit hard by the pandemic.

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