Friday, 24 August 2012

Growing Pains for UK Businesses

Summer 2012 is not a time banks will look back upon with any fondness.  Following the Natwest shutdown and LIBOR scandal, the latest rallying cry is “free banking for all” and an ever more forensic examination into the charges banks levy.   For anyone interested, there has been an explosion of self-help guidelines explaining these charges, although how sneaky some of these charges truly are is debatable.
However, one article that did shock me appeared in British SME magazine.  This highlighted how international bank transfer fees are worth £2bn to British banks every year...that’s £2bn that comes straight out of the pocket of British businesses.   From a quick bit of research on the big banks’ websites, charges vary between £20 - £40 per transfer, not to mention dubious exchange rates.  It doesn’t take a particularly adept mathematician to calculate what that could balloon to for businesses with a growing overseas presence.


Back in 2011, the Payments Innovation Global Jury noted that one of the largest missed revenue opportunity in payments is the tremendous opportunity to make cross-border B2B payments flexible, lower cost and faster.  Customers would love it.”  Great theory but even now half of all businesses are willing to accept the charges associated with transferring from a business bank account and were willing to reject other methods (e.g. foreign transfer specialists) on the grounds of time and hassle.
As an outsider it is easy to treat this with incredulity but equally, I don’t run a small business and have to deal with the raft of daily challenges.  The true cost of saving a few pounds per transfer could well be outweighed by the time and hassle of setting up accounts with multiple providers for different functions.  That’s before we even consider managing these accounts and trying to get them to reconcile.
The ideal solution would be for a provider of business bank accounts to be able to provide the global transfer coverage needed by an increasing number of SMEs but not at a cost that is scandalously high.  A single account for all incoming and outgoing payments would also enable a business to simplify their financial management, achieve substantial savings and – most importantly – get on with the far more critical task of running their business.
One account for everything.   Customers would love it.

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