I wrote a blog last month that spoke about the unnecessary friction within our industry and the simplicity that all of us who shop online crave. Having taken some time to think about this, I’ve come to realise that this friction isn’t just for consumers but is also prevalent for businesses in their dealings with financial services providers.
Let me give you one example. A new business wanting to sell online will require both a merchant account (for accepting card payments) and a business bank account. Simple? However, all but one of the banks have sold off their merchant account divisions. So what impact does this have? Well, it means two separate application forms (most likely paper), two sets of separate correspondence to keep up with and (more often than not) two, three, four, five, even six weeks before their accounts are approved and you're ready to trade. Throw in a web developer, accounting software a shopping cart and that’s enough friction to start a bonfire!
Once up and running, things don’t get any easier. You start growing and see a potential customer base in Europe, so want to open a Euro account. Repeat the above process all over. You want to integrate your expense reports and payroll into your banking? Best of luck, you’ll need it! Want to see the sum total of your business transactional activity in one place to save you time and hassle? You’d better be good at Excel or know someone who is!
I’ve previously written about new entrants into financial services and the success they’ve had in shaking up the market. One of the inherent advantages these providers bring is the speed at which they make decisions and can adapt to business’s needs. Clearly there are regulatory requirements that cannot and should not be avoided in setting up and managing business bank accounts. Sometimes though, innovation should be simply about solving the real issues that customers have, rather than creating solutions to problems that don’t exist.
Consolidation within the UK financial services industry has caused many of the banks to sell off their merchant account division together with other services deemed peripheral. Unfortunately the requirements to source these same services remain identical for businesses wanting to trade online. Business owners have no real love for their financial services provider – and after the last five years, who can blame them? – but it’s difficult to disagree with the argument that they are being short changed by cumbersome processes and legacy systems that at best are an irritant and, at worst, result in unnecessary friction turning into the brakes being clamped onto a business’ growth.
Any financial service provider who can remedy these issues truly would be innovating.