NEW DECADE - NEW BANKING

NEW DECADE - NEW BANKING

Anders la Cour

CEO at Banking Circle

Views 609

NEW DECADE - NEW BANKING

27.04.2020 03:00 pm

In late 2019 Revolut Business commissioned a survey of more than 600 business owners, managers and financial directors for SMEs in the UK, France and Poland, aiming to uncover the difficulties smaller businesses face in accessing credit, getting paid and finding suitable financial partners.

A whitepaper, ‘2020 Vision: Taking a closer look at antiquated banking practices’, has just been published, exploring the survey findings. The results did not surprise us in the Banking Circle office; in fact, they very much support our own SME research published in 2018 and 2019.

Setting the scene

The whitepaper paints a very clear and somewhat nostalgia-inducing picture of life and business a decade ago, highlighting the pace of change and the stark contrast between then and now:

“At the turn of the last decade, the global financial crisis was still just unfolding, with many banks around the world reliant on government aid to stay in business. It was a business landscape only just emerging from the analogue age: fewer than one in five people (19%) had access to a 3G smartphone[1], just one in ten (10%) of European SMEs had taken an order online[2]. It was an economy dominated by cash and cheques[3].”

“Ten years ago, many SMEs still relied on business services and practices that had not changed for decades. It was common to prepare accounts on paper and go to meet accountants weighed down with hardcopies of invoices, receipts and statements. They met with lawyers to draw up contracts and planned their work in team meetings and with paper diaries and planners.”

It is hard to believe this was our ‘normal’ just ten short years ago. In contrast, payments and banking has changed very little in this time. As Revolut confirms in its white paper, banking is still dominated by traditional incumbent banks. However, the survey also showed that whilst customers of high street banks report relatively high levels of satisfaction, there is also a “significant desire for change.”

New Banking Horizons

As with our own research, Revolut found that the industry is at an inflection point. Big banks have the invaluable benefit of history, long-standing and loyal customer relationships, established reputation. New entrants cannot compete with this. However, those big banks are slow to innovate, hemmed in by legacy infrastructure that is costly to maintain and leaves very little in terms of resources for investment in new products and services. This leaves them unable to compete with nimble FinTechs building brand new solutions specifically designed to meet today’s business banking needs.

Digital-first businesses need banking solutions that can keep up. Revolut asks, can this need be met by existing relationships? The report encourages businesses to take the new decade of 2020 as a chance to “take off your rose-coloured lenses and consider changing those relationships for the better.”

Finally, the white paper includes a helpful quick and simple self-assessment to help SMEs check how well they are currently served by their banking partner.

SME Banking Today

Some of the other key figures regarding current SME banking requirements reported in the whitepaper include:

  • 54% of SMEs seldom or never call their bank.
  • 40% seldom or never visit a branch.
  • 43% percent of SMEs use online banking daily to manage their accounts. An additional 30% do so weekly.
  • 33% of SMEs use mobile banking every day, and 28% do so every week.
  • 65% of SMEs in Poland, 49% in France and 37% in the UK have two or more banking relationships.
  • 10% of French and Polish SMEs, and 5% of UK SMEs, have relationships with four, five, or even six different banks.

Banking Circle delivers game-changing solutions to, and on behalf of, payments businesses and banks. Fully licensed but free of legacy systems, financial infrastructure is delivered at low cost but without compromising on compliance or security. We also provide access to the real-time payments SMEs need, regardless of borders and size of operator.

As a business we have always been committed to improving financial inclusion by building dedicated new tech, rather than tailoring or tweaking existing solutions. As a result, we now offer bespoke, flexible, scalable and futureproof solutions. We help Banks focus on the all-important customer relationship while we deliver the pipes and plumbing of new innovative solutions, and we help new entrants increase their customer base and their reach far more quickly than they could otherwise.

Latest blogs

Shuvo G. Roy Mphasis

Reboot 1.0: How financial services technology can enable the supply chain to support a post-lockdown boom

Ground control and Captain Tom When veteran Captain Tom Moore decided to walk one hundred laps of his garden before his 100th birthday to raise funds to support NHS heroes battling Covid-19 from the frontline, he never imagined that he would Read more »

Lisa Gutu Salt Edge

Building a PSD2 compliant channel: challenges and opportunities for financial institutions

PSD2 obliges ASPSPs including banks, e-wallets, prepaid cards and other companies that offer payment accounts to provide at least one channel for secure communication with third party providers (TPP). Even neobanks or e-money institutions, including Read more »

Thomas Pintelon Capilever

Credit origination - A lot of innovation on the horizon

While consumer credits are becoming more automated and user-friendly to request, all other credits are often still very manual and labor intensive to originate. In this (relatively long) blog I will try to give a description of the (potentially Read more »

Kelly Kearsley Hourly.io

Time Card Theft is a Big Problem. Here's How to Stop It.

Trust is at the core of every employer-employee relationship. You trust your people to do their jobs, and they trust you to compensate them for their work. Most of the time, it works. However, there's always the person looking to bend the rules or Read more »

Daria Afanasyeva UTP Merchant Services Ltd

Cybersecurity – Online payments are getting more secure

Ever since we've been able to buy anything we need with just a click of a button on our laptops or phones, online sales have been consistently increasing each year. Just last year, the total value of UK retail sales was £394 billion, with an average Read more »

Related Blogs

Sanat Rao Infosys Finacle

How banks can lead the way to recovery

In the midst of the global virus pandemic, the mandated shutdown of commercial activity creates significant future risk. But as we recover, banks can play an essential role to rebuild businesses and livelihoods, earning new trust that will help all Read more »

James Daniels FIME

Taking the pulse of India’s Fintech market at Finnoviti & Technoviti 2020

Last month, FIME attended Banking Frontiers’ Finnoviti & Technoviti 2020 in India. This year’s theme ‘Experience Everywhere’ reflected the growing emphasis put on the user-experience in today’s evolving payments ecosystem. Read more »

Steve Morgan Pegasystems

Are Challenger Banks Transforming the Lending Market or Just Providing Digital Makeup?

The short answer is yes…. sometimes to both. However, there is a huge change underway and enough evidence to suggest that customer and competitive pressure alone will drive more change, even without further regulatory updates. Globally, and in the Read more »

Matthew Phillips Diebold Nixdorf

Are We Building The Right Foundations For Banking Innovation?

The future of banking could be closer than we think. As the industry continues to build the bridges between the financial services of today and the financial services of tomorrow, the pockets of innovation coming to the fore are impressive. From AI Read more »

Steve Morgan Pegasystems

What Trends Will Shake Up the Banking Tech Sector in 2020?

In the past year, we’ve seen technology play a huge part in shaping the banking industry landscape, from emerging fintechs to new solutions facilitated by Open Banking to the latest AI tools. With such progression happening throughout the sector, we Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel