Issue 12 2019

CEO MONTHLY / SUCCESS STORIES 2019 19 , Anders la Cour, Co-founder and Chief Executive Officer of Banking Circle discusses the findings of the financial utility’s latest insight paper, and how payment service providers are developing better solutions for SMEs. Putting payments at the top of the to-do list You don’t have to dig too deep to find that late payments, limited access to services and restricted credit lines are seriously affecting the success and potential of SMEs of all sizes and stages. The SMEs who spoke to Banking Circle recently commented that access to payment services is restricted, it takes too long to open a merchant account and there is little support for accounts payable. Each of these hurdles can have a significant impact on an SME’s ability to maintain and grow its client base and profit margin. In turn, this limits its ability to expand, reach new markets, increase product lines and better serve its customers. With 24 million SMEs in Europe making up 99% of private businesses in the region, employing around 60% of the European workforce and contributing more than half of all business turnover, a problem holding back SMEs is a problem holding back the economy. Finding solutions Banking Circle recently commissioned MagnaCarta Communications to carry out in-depth research into financial exclusion and how different financial institutions can each play a role in supporting SMEs and improving access to banking and finance solutions. The resulting white paper and subsequent insight papers uncover the problems SMEs face in access to banking services, and the limitations of current offerings. David Selves, owner of the Selves Group of Companies, commented: “Three to five banking days for card payments is still the norm, which causes considerable issues for many small businesses who need to restock rapidly.” Michael Ault, COO of Universal Transaction Processing added: “SMEs have already been through an arduous process to get a merchant services account, and then it takes days to get their funds.” Access to finance has undoubtedly improved in recent years, but for SMEs this improvement is not enough. Access to additional funds is vital to almost every SME at some point in the first few years and is an essential lifeline to many. Yet loans will not solve all the financial challenges these businesses face. In the latest insight paper from Banking Circle, ‘Pay, Set, Match! Payment services for SMEs – Jump-starting a virtuous digital payment circle’, unique insights from experts working right in the heart of the payments sector provide up-to-the-minute feedback on the state of the industry, current provision, the challenges and what the road looks like up ahead. By gathering this range of first- hand insights, and sharing them with the industry, we believe we can work together with financial institutions to find better solutions which meet the current needs of SMEs facing potentially lethal financial exclusion. The unique challenge of serving SMEs Each SME is unique – some are one-man-bands, others have 249 employees. Some are local businesses while others trade internationally. Some are seasonal and others have a steady flow of income throughout the year. This immense variation creates a dilemma for financial institutions trying to build scalable solutions to meet SME requirements. What SMEs do have in common, however, is the need for banking services. Any business, any size, any industry, any target market and any turnover will need banking accounts. And almost all will, at some point, need an injection of cash, whether that is to kick-start an expansion, purchase stock at the beginning of the season or to replace broken equipment. The reality is, however, that a traditional business loan from a bank is generally too expensive, too inflexible and too slow to arrange, for a fast-paced SME in today’s highly competitive, digital and international marketplace. As Kent Vorland, CEO of SmartTrade App, told us during our research, “consumer products are not agile enough and providers have little knowledge of small businesses… Equally, the big boys have complicated functionalities, but nothing optimised for small merchants.” PSPs to the rescue? As Ivo Gueorguiev, Chairman of Paynetics said, “Any service providers deploying digital technology are ideally placed to serve SMEs, and would address the problems of scalability, access, utilisation and viability”. Supporting this view is recent research which showed nearly half of UK small businesses would be willing to move to a non-bank provider if their financial needs would be met in new and innovative ways . With many PSPs and other providers already delivering innovative ‘point’ solutions, and many ambitious SMEs currently underserved by their existing bank, the opportunity to build bridges and connect solutions is ready and waiting. Currently, SMEs are being let down by the existing offering. However, new providers and new solutions are coming to market to fill the void and deliver faster, more affordable and more flexible solutions to meet the unique needs of today’s SME. SMEs seeking this new generation of payment services need providers to offer joined-up solutions, working together with other providers in the industry to build innovative, successful, effective and affordable solutions. This is the aim of Banking Circle a Financial Utility with financial inclusion right at its heart, building real solutions for real problems affecting real businesses today. Only in this way can we increase financial inclusion and see the resulting benefits to the global economy come to fruition. For a copy of the latest insight paper, visit www.bankingcircle. com/whitepapers https://www.altfi.com/article/5204 Oct19615