Wednesday, 30 May 2012

Are banks truly supporting UK businesses?

There is certainly a lot of focus in the UK on small businesses at the moment.  Given the massive potential for small businesses to plug the hole in the UK economy, it is unsurprising that the failures of high street banks to provide affordable loans has attracted both questioning and anger. It seems interesting then that there has been so little discussion about the wider role that banks can play in supporting small businesses.

The top four banks hold over 80 per cent of small business bank accounts in the UK.  But non-bank business finance is having its moment, and with new players now stepping in to fill the funding hole that banks have left UK businesses with, now is the time to question – are banks truly supporting UK businesses?

A few weeks ago I wrote a blog looking at the current customer demand for innovation in banking – the market is awash with new players, from PayPal to Amazon, all vying for a slice of the banking pie and happy to offer new and exciting banking products. 

Competition is definitely hotting up and banks need to offer more – especially to the UK’s small businesses who entrust so much of their capital to them.

There are a number of ways for banks to improve support for small businesses.  Overdraft and loan interest rates are just one example. 

Most banks offer short-term financing solutions, but these are often tied up with high interest rates and prohibitive fees.  At a time when all businesses, whether small, growing or giant, are struggling with a harsh market environment, short-term financing is critical to business stability – and there are plenty of players looking to take advantage of this gap in the market. 

The fact is that businesses, particularly fast-growth companies, need funding to survive, so if banks are not providing affordable options, these companies will be forced to look elsewhere.

Other business support options might include some of the innovative solutions I have previously written about: online banking, mobile payment support or contactless payment capability. It could even include ‘soft’ support, like Barclay’s free ‘Start-up Guide’, which it gives to new business customers.

One thing is clear – the banking industry needs to buck up its ideas and commitment to the customer if it is to fight off competition from new non-bank players.  This is especially important if banks are to support small businesses, which are increasingly happy to look elsewhere for the financial support that they require.

Tuesday, 15 May 2012

Paying through the Personal Area Network

Last week I wrote about my first-hand experience with Barclays Pingit App and how it failed at the final hurdle while I tried to enrol to the service; I still haven’t visited a branch to produce my documents as for me at least this defeats the whole purpose of Mobile banking.

The other day while researching I spotted Pingit was number 1 under the iTunes Finance section clocking up more than 400,000 downloads in its first 8 weeks. Why is Pingit proving so popular you may ask? I have a little theory that this is one of only a few services which verges on the use of a personal area network (PAN). PANs are computer networks organised around an individual and typically involve a mobile device; laptop, tablet or mobile phone.

Traditionally the PAN has shared our digital content around using technologies like QR codes, Bluetooth and MMS. With today’s always connected smartphone your PAN usage is rapidly expanding through to your social networks allowing you to share that content in seconds. With Pingit using the same PAN to make payments cashless, something the industry has been longing to make possible, how long until peer-to-peer payments with Pingit are conducted over Facebook, Twitter or LinkedIn?

Leveraging the personal area network has its advantages but it may also introduce unforeseen problems. Pingit payments are irrevocable and final so the onus is on the consumer who needs to makes sure the details are correct. But what happens if their Pingit account's PIN is compromised? Consumers need to have confidence and know that any new payment channel has an equally developed fraud prevention tool behind it.

There are now a range of mobile payment fraud prevention tools in the market but the most secure way of accepting payments is with the use of biometrics, like the awarding winning VoicePay service. VoicePay won 'Best Security or Anti Fraud Development' at the Cards and Payments Awards this year and clearly demonstrates that voice verification is no longer science fiction. The use of a voice signature removes the need for consumers to disclose card details, account passwords or even their PIN and can provide a truly mobile experience.

As banking becomes more personal and reaches out across our digital lives, so too will our interfaces with it. With services like VoicePay it's pleasing to know that despite the technology revolution and the digitisation of banking ultimately payments through my personal network will still be as approachable as talking to my friend. After all, my word is my bond.

Friday, 4 May 2012

Internet World 2012: Is Mobile Commerce the new frontier for payments?

It was clear from attending the Internet World exhibition and seminars last week, and from speaking to a variety of people at the show, that E-commerce and more prominently M-commerce were the two big talking points of the exhibition. One of the most thought provoking seminars “Beat the Bankers. Financial Services Evolution” proved to re-iterate the fact that great innovations and advances are happening in the payment sector and not necessarily from the usual places.

One of the biggest drivers to creating these advances is the rapid adoption of smart phones and mobile commerce which are now starting to impact the way businesses make and accept payments.  For SME’s this additional payment channel is gradually becoming more accessible and now enables businesses to accept card payments directly after completing a job, using just their mobile phone.

A relatively new innovation which was very prominent at the show and is now starting to be more commonly seen is near-field communication (NFC), which is designed to support the increase of mobile payments.  NFC technology allows contactless payments to occur, and ever-more mobile phone manufacturers and operators are beginning to include NFC technology into their phones as a standard feature.

Other advances in this sector have enabled accepting payments on your mobile which currently requires either a Chip and PIN device or authorisation from an e-wallet, like PayPal or VoicePay. A business now has the ability to convert a mobile phone into a portable payment terminal, which has provided businesses with new ways to sell their products and services on the move. It has also enabled certain industries and trades to start accepting card payment where previously no such option existed.

It is clear that mobile commerce will soon move to the placement of a mobile wallet onto the phone. Customers can then top up their mobile wallet directly from their bank account, allowing them to make unlimited mobile purchases securely and with speed and ease.

So what will be next?

The real power of mobile commerce is in the enabling of customers to make instant purchases not just from a physical shop but from offline marketing material like TV ads, magazines, exhibitions and brochure ware. Using QR Codes, customers can receive both additional product details but also they can make an instant purchase using either the funds loaded onto their phone/e-wallet or by being redirected to the businesses online payment page.

The speed in which this industry is moving and the great steps that have already been taken in both the e-commerce and m-commerce space, I personally can’t wait to see what next year’s show will bring us... Instant purchase and control from anywhere with any device perhaps? Watch this space!