Can the Market Deliver the Consolidated FinTech Tool Small Businesses Need?

For most of us, payday is a relief. For the typical small business owner, it's a nail-biter.

alexsl | Getty Images

In her latest book, "Fintech, Small Business & the American Dream," Karen G. Mills, senior fellow at Harvard Business School, shares one entrepreneur's payday struggles. In chapter eight, Mills profiles a brewery owner who isn't sure whether she can afford to pay both her team and her vendors. Until she strings together data from dozens of apps and accounts, she doesn't know whether her business will be in the black or red that month.

If you think Mills might have cherry-picked her example, consider that 63 percent of small business owners surveyed by online lender Kabbage say they're regularly stressed about cash flow. The problem is so persistent that more than half of them had even gone multiple months without paying themselves.

Entrepreneurship is financially risky, to be fair. But the brewery owner's struggles -- scattered services, insufficient data and a lackluster user experience -- are ones Mills argues the market can solve.

Related: 10 Expert Tips on Managing Cash Flow as a New Business

Three Providers, One Platform

At present, three companies seem poised to fulfill Mills' vision for small business leaders. Although none yet offers a one-stop fintech tool, they've each got a good chance of becoming one.

Intuit, provider of QuickBooks, TurboTax and Mint, has the most tools but arguably the greatest challenges ahead of it. Not only do QuickBooks, TurboTax and Mint each have their own use cases, but they command loyalty from distinctly different user bases.

The reason is based in Intuit's business strategy. Since its founding in 1983, Intuit has made at least 28 acquisitions to broaden its service offerings. For online banking software, it bought Digital Insight in late 2006. The next year, it acquired Electronic Clearing House for check-processing power. That same month, it purchased Homestead Technologies for the company's e-commerce tools. In 2009, it added online payroll processing by acquiring PayCycle.

Intuit's challenge is now consolidating all of those services and more within a single interface. Before it can truly be called the fintech platform to rule them all, Intuit needs to show it has the brand strength and UX skills to build a unified customer experience.

Related: Can FinTech Really Help Small Businesses?

Contemporary Competition

The second company working toward Mills' dream for entrepreneurs has precisely the opposite issues of Intuit: Small business lending platform Kabbage may have mastered its niche, but it's missing many of the peripheral financial services that small business owners need.

Kabbage's main challenge stems from the fact that it's barely a decade old. Because it grew up in the digital era, Kabbage gives small business owners the ability to link third-party business accounts, such as Amazon sales and UPS shipping data, to be approved for funding in minutes. But because it came of age so recently, Kabbage could struggle for traction in spaces like tax preparation, business budgeting and credit card processing -- areas that larger peers like Intuit are sure to fight for.

What Kabbage lacks in scale, however, it may be able to make up for with its user experience. Because of its digital roots, Kabbage's user experience beats that of many traditional banks. When UserZoom compared it to Wells Fargo, the UX researcher found that Kabbage users were 16% more successful at identifying the true cost of a 12-month loan than those who do business with the major bank.

Related: How Fintech Advances Are Creating New Opportunities for Micro-Businesses

Squaring Off

Founded in 2009, Square is another digital native that may fulfill Mills' vision. Its advantages and challenges, however, are different than the ones Kabbage faces.

Although Square has an app, the truth is that most small business owners see it as a point-of-sale solution. Mention Square, and most will think first about the company's iPad-like register terminals. Despite the fact that it also offers payroll services and small business loans, Square has struggled to brand itself as more than a credit card processor.

To be sure, point-of-sale and card-processing tools are critical to many small businesses, particularly those in the retail space. But at present, Square's offerings are missing the data feeds that small business owners need. Its Square Capital page claims that application is easy, but it also notes that small business owners' eligibility "comes down to [their] history with Square." If Square hopes to be a one-stop platform, it needs a richer array of data feeds. Given the walled garden it's built, that's going to be difficult.

As Mills makes clear, multiple financial firms have cobbled together pieces of her "one platform" ideal. Intuit has the breadth, Kabbage has the data and Square has the hardware to stay top of mind. Which will win? That's a question that only small business owners can answer.