Wednesday, 21 November 2012

Oh, the weather outside is frightful.....

Christmas is a season of joy. For small businesses, however, it is also a period of staff holidays, increased workload, snow days and sick pay. And these aren’t the only problems British businesses face this year. What are the seasonal issues impacting small businesses and how can SMEs dodge these festive curveballs?

Recent retail figures tell us that sales volumes dropped 0.8% month-on-month in October, suggesting that Britons are gearing up for a bumper couple of months of Christmas shopping. While this is great news for the British high street, this type of inconsistent spending pattern wreaks havoc on business plans and cash flow, especially for smaller businesses.

What’s more, this year the pressures are even greater, as consumers look to technology to help them handle their Christmas shopping. Research out last week from IMRG and Capgemini tells us that £4.6 billion is forecast to be spent online in the first two weeks of December alone, representing a huge potential missed opportunity for small businesses which aren’t operating online. Not only that, but 20% of this figure, approximately £920 million, is expected to be spent on mobile devices, including smartphones and tablets.

While these sorts of numbers bring about positive cheer for retailers and their revenues, we cannot ignore the challenges.

No one wants to feel they are missing out, and with an increasing number of consumers looking to take care of their shopping on the move, offline retailers need to keep up with the pace. IMRG and Capgemini also revealed that in the first quarter of 2012 8.2% of total e-retail sales were made through a mobile device; by the end of the fourth quarter this figure is anticipated to reach around 20%.

Merchants must have an online presence and mobile application for payments – two integral weapons in retailers’ arsenal this Christmas.  Traditional and alternative payment players are entering the scene to assist in this vocation, in a bid to help businesses grow.

Take this Christmas as an inflection point – the way consumers spend will change, and the impact of this is going to be felt far after Christmas and into 2013. Do not leave yourselves out in the cold.

Thursday, 15 November 2012

Emptying Wallets

For as long as I’ve worked within this industry, there has been incessant talk of mobile wallets and how they are going to redefine our everyday payments. Last week saw the battle lines redrawn at Cartes as a whole host of banks, mobile operators, global payment schemes and new players exhibited their latest offerings.
The fundamental issue with many of these solutions that, by their nature, they operate within a limited circle and still do not possess the global reach that a simple piece of plastic still has. The lessons that came through so loud and clear in the Spring at Mobile World Congress about collaboration being key to success seem to have been stifled in Autumn. It may be simplistic but it remains easy to see m-wallets as a solution to a problem that doesn’t actually exist.

The most memorable metaphor I’ve heard on this issue was a conference speaker who drew a parallel between mobile wallets and handbags. Yes, there’s nothing to stop you owning as many m-wallets as you like but you’re only likely to use one at a time…which I assume is also true of handbags (although happy to be corrected!)  

That’s not to say an m-wallet can’t thrive in Europe today, but in order to generate both awareness and advocacy amongst a largely apathetic consumer market, it will require best-in-class convenience or rewards if it is going to displace established payment methods. Maybe this means having ID documents, reward cards, organisation memberships, season tickets and a whole host of intuitive discounts all in one place or maybe it means having a wallet that also starts your car, locks your door and turns off your lights…the case has not yet been proven either way.

Seeing the range of – competitive – solutions now available, there are also uncomfortable echoes with the NFC paradigm. Mintel’s research earlier this year showed that only a quarter of people with a contactless card have actually made an NFC transaction –  despite repeated efforts from the banks, there are no guarantees if you build it, they will come. Overcoming the usage challenge for m-wallet operators becomes tougher when you consider that, unlike NFC, providers are not working towards a common standard and, unlike NFC, operators do not have the Olympics as a ‘Big Bang’ showcase for the technology.

As with most accessories, the danger for the m-wallets of 2012 is that consumers’ attention switches elsewhere and they end up consigned to the back of the closet. That said, the battle between m-wallets should result in greater innovation and consumer focus and it will be intriguing which solution becomes the must-have accessory for 2013.  

Friday, 2 November 2012

Business bank accounts - free vs. fee?

Banking has been hitting the headlines in all manner of guises over recent months – from IT problems through to bonuses, the UK’s banking community has never been under more scrutiny. This is why it came as little surprise a few months ago when attention turned to banking fees and the idea of ‘free banking’. Of course, there are strong arguments on both sides – whilst some customers are stung by high ‘hidden’ fees, there are plenty of responsible and prudent banking customers who have never encountered a bank charge and would resent paying for what was a previously free account service.

Yet, the plot thickens when we consider where businesses fit into the free banking debate. The high fees and charges often attached to the standard business bank account delivered through our five incumbent banks are starving businesses of key funds. Business bank accounts often require an upfront fee and yet businesses still end up paying over the odds in additional fees, in the form of interest rates, foreign transfers and overdraft charges. In fact, a recent YouGov survey revealed that small businesses in the UK are paying £2.3 billion every year to banks in business account fees. This is a shockingly high number, especially when one considers that Project Merlin, which was intended to encourage lending from the top 5 banks to small businesses in the UK, actually missed its target by a whopping £1.1 billion.

In the world of business banking, paid-for accounts have not necessarily resulted in fairer banking – businesses still face overwhelming fees and charges and they don’t even receive the financial support they need from banks in terms of lending. This is why the key to banking, both business and personal, lies in transparency. Customers, whether business or consumer, should never receive a charge they weren’t expecting, and absolute transparency would ensure this is the case.

This is a situation which banks need to be aware of – after all, the same YouGov survey revealed that over half of businesses would move their business current accounts to another provider to reduce account cost outlays. Given the number of new finance companies which are currently chipping at the banks’ heels, keen to offer businesses lower charges and more innovative banking solutions, we are definitely now faced with an era in which implicit loyalty to our banks is over. Business banking will never be ‘free’ but now is the time to free banking of complicated and unclear charges using bank account models that help organisations drive funds back into the balance sheet.