Banking-as-a-Service: What the new Railspay and Parpera partnership means for Aussie SMEs

Aussie fintech Parpera has partnered up with Railspay and Volt Bank to launch a new Banking-as-a-Service product, ushering in a new era of small business banking that relies less upon the big four.

Railspay, the Australian arm of fintech platform Railsbank, entered Australia through a partnership with neobank Volt back in March.

The pair have now teamed up with Parpera, a money-management platform tailored to sole traders, startups, freelancers and gig workers, to create an end-to-end Banking-as-a-Service (BaaS) solution.

The partnership allows Parpera to offer an entirely app-based, mobile business solution, including access to a Volt bank account and business debit card, as well as invoicing tools, cash-flow and tax reporting and capturing of receipts.

Founded in April 2020, just as the COVID-19 pandemic was taking hold, Parpera is designed to help business owners — particularly those running micro-businesses — to easily manage their finances digitally.

A BaaS solution takes that to the next level, offering business owners an alternative to banking with the big four, while opening up routes to growth, both in Australia and overseas.

An evolving economy

Speaking to SmartCompany, Parepera founder and chief executive Daniel Cannizzaro suggests that we have transitioned “from the old economy to the new economy”.

Banks were initially created to lend money, he notes. Today many businesses, particularly small and micro businesses, don’t have lending needs. There is more demand for banking services to help them manage their finances and grow their business.

This is what Parpera set out to provide, Cannizzaro explains. By connecting with Volt via Railspay, the fintech is now able to offer specialised banking services in a way the big banks don’t.

Cannizzaro sees the banks becoming “more like utilities” in the future, he says.

“The banks are the experts in managing risk and managing the liquidity of money, and fintechs have proven to be market leading in terms of understanding the customer’s needs and best serving them.”

Railspay is set up to connect businesses like Parpera to banks, allowing them to add banking to their own solutions.

General manager of Railspay Ben Smith sees a future of democratising access to banking, he tells SmartCompany.

It’s about “decoupling the banking capabilities from the banks themselves”, he says.

A win for SMEs and for fintech

All of this marks a change in direction in business banking in Australia, heralding an era of more options and more tailored solutions for small businesses.

Speaking to SmartCompany, Jason Andrew, business accountant and co-founder of SBO financial, notes that it’s generally not feasible for big banks to offer their best services to sole traders and micro businesses, whose needs are considerably less than bigger enterprises.

That means tailored services are either decidedly average or non-existent.

Improving accessibility to business banking reduces friction for those in the earliest stages of building a business, and that can only be a good thing, Andrew says.

But it’s also exciting for fintechs. Platforms like this remove “regulatory roadblocks” for startups, allowing them to focus on their core product and use case, he explains.

He also predicts Parpera, and those that follow, will likely move into credit products and loans.

“A banking platform does open a wave of opportunities for startups to build on top of.”