What is the Financial OS? The Future of SMB Banking and Fintech

Inside the shift from disconnected point tools to an integrated operating system for small businesses.

Introduction

Most small and mid-sized businesses manage their finances using a patchwork of tools. QuickBooks tracks the books, Stripe handles payments, Toast runs point of sale, Gusto processes payroll, and the bank holds the cash. Each system does its job, but none of them work together.

The result is duplication, manual work, and limited visibility. Research shows that nearly 8 out of 10 SMBs juggle multiple systems, and almost all would prefer a single platform to manage finance (BuiltIn).

The Financial OS is that platform. Instead of disconnected apps, it provides one place to manage money in, money out, cash flow, insights, and every core financial workflow.

Defining the Financial OS

The Financial OS is the single platform for managing all of a company’s financial operations. It brings together money in, money out, cash flow, insights, and daily workflows in one place.

One way to understand the products inside the Financial OS is to group them by how they use data:

• Data Hub products focus on reading data to provide visibility and insights. Examples include lending, forecasting, supplier enablement, instant payouts, and tax.
• Accounting Automation products depend on both reading and writing data to power workflows. Examples include bill pay, invoicing, expense management, payroll, and bank feeds.

Both groups are essential. Data Hub products deliver visibility and intelligence, while Accounting Automation products execute the workflows that keep finance running. Together they form the Financial OS: a single platform for financial operations.

Why the Financial OS Matters

For SMBs, the benefits are straightforward. They save time on manual work, gain real-time visibility into cash flow, and access credit and payments more easily.

For banks and fintechs, the Financial OS is more than a vision. It is a growth strategy. Embedding financial products directly into the workflows that businesses already use drives adoption, deepens retention, and unlocks new revenue.

• 64% of SMBs want financial services delivered inside their core software (a16z).
• SaaS companies see revenue per customer increase two to five times when embedding fintech (a16z).

Market Trends: Everyone Wants to Be the Financial OS

Every major provider is moving beyond its core to offer a broader set of financial products.

The trend is clear. Everyone is chasing the Financial OS. The winners will be those who deliver the best products and the most seamless workflow automation for SMBs.

How Builders Get There: A Mix of First-Party and Embedded

There is no single path to the Financial OS. Most platforms combine what they build themselves with what they integrate from partners.

• First-party products: Banks, SaaS providers, and payments companies often build the features they see as core. Rippling added spend management on top of payroll, and Square expanded into lending and payroll.
• Embedded fintech partners: Other products are faster to launch through specialists. Autobooks powers invoicing inside banks, Parafin provides embedded lending, Bill.com and Brex have moved into forecasting, and Treasury Prime delivers banking as a service.

Most platforms mix both approaches. A bank might build bill pay in-house, embed lending from a partner, and integrate payroll through APIs.

What Makes the OS Possible

The Financial OS only works if products can access and act on data from the systems businesses already use: accounting for financials, commerce for sales, banks for cash, and payroll and HR for people and expenses.

A unification layer makes this possible by sitting between those systems of record and Financial OS products. It standardizes connections and provides three core functions:

• Single authentication: One connection powers both first-party and third-party products.
• Governance and security: Permissions, scopes, encryption, and compliance ensure data is shared safely.
• Read and write access: Products can pull data for insights and push data back to run workflows.

Without a unification layer, the Financial OS remains an idea. With it, institutions and platforms can deliver a secure, integrated system for financial operations.

What’s Next

This post introduced the Financial OS vision. Next we will explore Layer 2, the two groupings of products.

• Post 2: What is a Data Hub? Why reading data from systems of record matters, and the products it enables such as lending, supplier enablement, forecasting, tax, and payouts.
• Post 3: What is Accounting Automation? Why writing back into systems of record matters, and the workflows it powers such as bill pay, invoicing, expense management, payroll, and bank feeds.

From there, we will move into Layer 3, with deep dives into each product use case, along with examples from the market.

Follow along as we publish the rest of this series to stay updated as we cover each layer of the Financial OS.