HSBC challenges fintechs with launch of SME banking app Kinetic

HSBC has officially launched its business banking app Kinetic, designed to offer small and medium-sized enterprises (SMEs) a comparative service to new fintech entrants.

The bank launched Kinetic in beta in February 2020. Peter McIntyre, the bank’s small business banking head, recalls the soft launch. It commenced after one of his last meetings in the Waterloo WeWork before the UK went into lockdown.

Kinetic costs £6.50 a month after the first 18 months

Prior to its beta, a UK-based team of around 150 had been working on Kinetic since 2018. Nadya Hijazi, HSBC’s global head of digital business banking channels, heads up the team, which works in tandem with McIntyre’s operations.

Hijazi tells FinTech Futures the digitally native app has accumulated some 4,500 SME customers through self-selection, having initially given 1,500 start-ups access to the beta offering.

A host of features

“We’re taking the toolkit approach of the challengers, which allows SMEs to plug and play,” explains Hijazi.

Targeted at sole traders, limited companies, and technology-focused start-ups, Kinetic offers businesses a debit and credit card, cash flow insights, same day overdrafts, a savings account, and the ability to set up future payments.

The £6.50-a-month offering is free for the first 18 months, and integrates with accounting software providers Xero, QuickBooks, and Sage.

McIntyre says the bank will offer Android parity for the app in May. Later this year, the bank intends to offer a small business loan product via Kinetic, and turn on international payments.

During the pandemic, the bank issued government-backed Bounce Back Loans through Kinetic. Hijazi says it took the bank just two weeks to spin up the offering, “defying the assumption that HSBC is a monolith”.

McIntyre thinks “now seems like the right point to launch [Kinetic] formerly”. He points to the 4.7 rating average on the Apple Store for the app’s iOS version, which he and Hijazi feel is testament to HSBC’s iterative project approach.

Reverse engineering

Rather than requiring SME customers to choose between Kinetic and its traditional business banking offering, HSBC is attempting to drive what Hijazi calls “a convergence programme”.

“We’re trying to avoid concept of a migration,” she explains. This means customers can pick and choose offerings from both.

McIntyre adds that the bank “will be writing to [all] customers later this year to make them aware of Kinetic”.

But HSBC has already begun a reverse engineer approach to integrate Kinetic into the bank’s existing offering too. This sees the app become an even larger part of HSBC’s billion-pound global banking commitment to digital investments.

“We’re keen to leverage infrastructure of the wider bank,” Hijazi explains. “We don’t want start-ups to have to move around to different infrastructures.”

She adds: “Kinetic’s cloud-based technology allows us to scale with our large customer base and gives them better use of analytics.”

A variety of inspirations

The Kinetic team “took a lot of inspiration from the market”, according to Hijazi. She cites both challengers’ offerings and the lessons learnt by fellow incumbents attempting to re-disrupt business banking.

UK high street bank NatWest, for example, launched Mettle for digitally literate SMEs. Though its other business fintech offering, Esme Loans, was officially wound down earlier this year.

“We’ve tried to pick the best of both,” says Hijazi. “We want the same can-do attitude as start-ups. We don’t want to get bogged down in the traditional bank way. That way, we can move at pace – which is where the challengers come from.”

As well as domestic players, HSBC’s connections with China and Hong Kong have meant the Kinetic team have looked to Asia-Pacific regions for inspiration. “They’re pushing boundaries there too,” says Hijazi.

Kinetic’s head describes herself as a “great fan of small teams which are specialised”. Largely because they integrate well with each other and keep that sense of a start-up, as opposed to layered bureaucracy.

Having grown up in the Emirates, Hijazi brings with her a motivation which knows no bounds. “The ethos there is ‘no such thing is impossible; it just means you’re not trying hard enough’.”

Such an attitude to work made her want to break through what she describes as “a very thick glass ceiling”, being a woman passionate about both digital and banking.

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