FOP and SMEs

A WORLD WITHOUT CASH? Payments technology has gone global – with mixed results

OPEN SEASON How open innovation can be a great way for SMEs to grow

KEEPING SMES IN THE DARK Smaller firms are already bearing the brunt of Brexit uncertainty. What happens next?

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Joining the dots between legacy banks and the payments sphere OPENING SHOTS ZITA GOLDMAN

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F YOU ask different stakeholders in the payments ecosystem about how the implementation of open banking and digitalisation is progressing in the UK, no two opinions will be the same.

Third-party providers (TPPs) – account information and payment initiation service providers respectively – often feel the incumbent banks are dragging their feet with implementation. Their mandatory APIs (Application Programming Interfaces), which lie at the heart of open banking, are inconsistent and clunky, and consent journeys are cumbersome. As an Accenture study pointed out, it can take two minutes and 15 screens to approve an access request, and most of the APIs in the UK are only usable by human beings.

Meanwhile, the open banking implementation entity’s Fingleton Report, published in July, quotes a TPP interviewee praising OBIE’s open banking standards, saying that “the actual banking standard

is an absolutely phenomenal piece of work… if it became an internationally recognised standard, I would be totally fine with that.”

Indeed, in a pan-European context, OBIE as a regulatory and policing body of technical, UX and operational API standards is unique.

In Europe, standards tend to vary from bank to bank, and third-party providers and account holders face more complexity and more disparate user experiences. Unlike OBIE, the EU doesn’t even explicitly require banks to use APIs to meet PSD2 (the equivalent of Open Banking in Continental Europe) standards, and TPPs are expected to be able to integrate with both dedicated (open banking and other major API standards), as well as non-dedicated interfaces (such as adjusted versions of already existing payment-service-user facing interfaces).

June 7 2018 was a milestone in the history of open banking APIs: having been granted authorisation

“Third-party providers often feel the incumbent banks are dragging their feet with implementation”

by the Financial Conduct Authority (FCA) to deliver payment initiation and account information services less t han a mont h earlier, Token.io Limited, a computer software company based in San Francisco, became the first PISP to execute an end-to-end payment through a public bank API, using Santander’s API payment initiation endpoints.

Token’s ambition to play the role of the number one open banking integrator is based on its Token Operation System, which provides one interface to access all banks for both data and payments. Thanks to its own open-banking platform, Token claims to be able to connect banks to banks, merchants to banks and third-party providers to banks – faster and with less friction than anyone else on the market.

But there seem to be other fintech firms as well who can harbour similar ambitions, such as Swedish Klarna, currently the most valuable fintech in Europe, with access to

more than 4,300 banks across the continent, while Volt, a Dutch TPP payments provider operating across 14 markets, enables TPPs access to more than 4,000 banks.

It seems OBIE’s approach to open banking API development will be taken to the next level by the likes of Token, whose standardised account aggregation APIs will enable financial services that go beyond what mandatory incumbent APIs can deliver.

If, by providing easy access to banks, these aggregators can enable TPPs to come up with compelling, high-value use cases for both individuals and SMEs – for example, variable recurring payments, refunds, loans, services currently still missing from the TPP portfolio – this may lead to a breakthrough in terms of customer trust and account-holder willingness to share data with third parties, which could eventually, and dramatically, increase the uptake of open banking in the medium term.

The millennials have taken over: time to stop moaning and start optimising

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ITH MILLENNIALS an ever-growing part of the workforce, older baby boomer and Gen-X executives can often get frustrated and nonplussed by a generation with a reputation for being flaky, temperamental and prone to a sense of entitlement. But it’s also one that can be highly productive and tech-savvy if managed correctly.

The struggle to retain and engage this younger generation at work can be seen in many common complaints from their employers: about what they’re wearing, how they’re speaking, their lack of timekeeping or resilience, their overbearing parents, phone addictions, and a general rudeness and lack of boundary awareness.

Plenty of other articles have already outlined stereotypical problems of narcissistic, lazy and entitled millennials. But this one will focus on the single most powerful strategy I think exists: education.

Working in extreme psychiatric, rehabilitation and forensic settings has taught me that, while humanity is diverse,

humans are still human, whatever their age or background. My studies at Cambridge and the pursuit of a psychology doctorate have verified this notion with substantiated research. And my experiences as a therapist, educator, speaker and consultant have showed me that a better understanding of each other, and of ourselves, will heighten engagement and performance across a diverse pool of individuals.

The mindset that I advocate is that age is just another form of diversity.

The last few decades have witnessed a wave of education in diversity, which has led to better working relationships, more effective workplace cultures and better results. Research has repeatedly shown that the best executive teams are those that are diverse – whether that’s defined by gender, sexuality, ethnicities, race, religion, and so on.

I challenge you to reassess your view of millennials in light of this. Instead of seeing them as a category to “fix”, why not consider them as

a new category of diversity that needs to be understood, embraced… and optimised.

My background is in psychology, education and history, and the way that behaviours in generations have unfolded is an area that intrigues me. I very much enjoy running workshops exploring why generations are the way they are, and executive teams have revealed they are especially surprised by the difference a better understanding can have on management.

For example, the understanding that with the development of children’s rights comes the strengthening of young people’s voices, which could lead to an entitled attitude.

Or, with the rise of technological advances, comes social media – hence the ongoing need for feedback at work: “likes” all day on Instagram far outweigh a monthly appraisal. You’re just not giving them that buzz.

The bottom line is that there are reasons behind millennial tendencies

other generations might find annoying.

While education doesn’t change them, it helps us understand them, and with that comes stronger inter-working and better results, which research has shown will ultimately lead to better staff retention.

Managers have shared with me that the talent is often missed due to how difficult millennials can be to manage.

However, with a better understanding of the context to their differences it becomes easier to understand and relate to them, manage them more effectively and get better results.

They might be irritating, but millennials are also the best collaborators, the most productive and the most techsavvy. They’re also now the largest generation in the workplace, so we’ll all need to get used to working with them sooner or later.

INDUSTRY VIEW

Elizabeth Michelle is a consultant and speaker, who enhances staff potential, performance and retention, with a focus on Millennials and Gen Z elizabeth@elizabethmichelle.co.uk

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Government fast-tracking EORI customs numbers for small businesses

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Top bankers warn Javid of no-deal Brexit threat to SMEs DAN GEARY

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AJID JAVID has been warned of the dangers a no-deal Brexit could pose to the UK’s small to medium enterprises by a group of senior bankers.

At a high-powered summit attended by around 20 of the UK’s top City bosses, the chancellor was cautioned that, although larger businesses had made contingency plans to weather the storm of a no-deal, many of Britain’s SMEs – which account for 99 per cent of all private-sector business across the country – remain dangerously unprepared.

The meeting, which was called to address “Brexit opportunities and challenges”, included representatives from Barclays, HSBC, Lloyds Banking

New payments sandbox could help fintechs and banks experiment with APIs

• Chancellor questioned during September meeting with top finance executives • A ny pre-Budget forecast depends on certainty of Brexit outcome, says Office for Budgetary Responsibility Group, JP Morgan Chase, Goldman Sachs, Allianz, Legal & General and the Royal Bank of Scotland, who highlighted ongoing concerns about supply-chain readiness and the temporary regulatory permissions regime, which is intended to safeguard firms passporting into the EU in the event of a disorderly Brexit.

It was described by one attendee as “a photo opportunity for Mr Javid to show that he was engaging with the financial services sector”, according to a report by Sky News in September.

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ONDON-BASED TRIBE Payments is launching a free-to-use payments sandbox, which allows both acquirers and issuers – including banks, fintechs and challenger banks – to explore, integrate and experiment with all of Tribe’s APIs. Tribe’s developer sandbox will also open up the opportunity for businesses outside the offering’s core target audience to develop new ways of using and offering payments.

Once the developer is happy

The firms represented at the meeting have put in place costly contingency plans to absorb the potential impact of a no-deal Brexit, with many of those attending having argued publicly that leaving without a deal would do enormous damage to the UK economy and London’s status as world-leading financial centre.

The chancellor is meanwhile preparing for a giveaway Budget in the week of October 21, following his September spending review, in which he set out significant increases in public spending – although it was

to move into production the service can be made “live” at the flick of a switch.

“Nimble fintechs and fastfollowing incumbents need first mover advantage to win over innovation-hungry consumers and gain market share,” said Alex Kelly, VP of product at Tribe Payments.

“This has led to a technology arms race, where payment providers are seeking the next ‘killer app’ that will give them an unfair competitive advantage. But developers at these

dismissed by opposing MPs as cynical electioneering.

However, when or even if the snap Budget goes ahead depends on the UK getting a Brexit deal that will allow for a positive forecast by the Office for Budgetary Responsibility.

The OBR has warned that it can only make a pre-Budget forecast once it knows what will happen with Brexit.

In a letter to John Mann MP, chair of the Treasury Select Committee, OBR chair Robert Chote wrote: “If the government wished to hold a Budget before or soon after the date on which the UK is due to leave the EU – and accompany it with a forecast – we would need to know at the beginning of the process whether it intended to design the policy package for a ‘deal’ or ‘no deal’ Brexit.”

EARLY 90,000 UK firms are being rushed through customs systems by the government in an attempt to prepare them for Brexit.

The companies in question, which are in the VAT register, are being automatically allocated Economic Operator Registration and Identification (EORI) numbers, which identify them to customs authorities. This will “help ease the flow of goods at border points and support businesses to trade and grow”, said chancellor Sajid Javid.

However, a group representing small businesses has said that firms also need tax measures to boost cash-flow and adapt to any new trading circumstances from November 1. “If the nightmare of a chaotic

no-deal Brexit on October 31 becomes a reality, our small traders will be the first ones off the cliff,” said Mike Cherry, chairman of the Federation of Small Businesses.

Bank of England governor Mark Carney has also warned that many small businesses are not ready for the shock of a no-deal Brexit.

Ministers were also accused of “fiddling” figures after the government was forced to publish its Operation Yellowhammer documents last month. These predicted a “low risk of significant sustained queues” at ports outside of Kent – but new documents revealed this would be because thousands of HGVs would be turned away before even reaching the ports without the required paperwork.

firms are hamstrung by environments that don’t allow them to test and experiment quickly and easily.”

Such a move could level the playing field by giving nontraditional providers an opportunity to develop their own services in a safe environment. Issuers and acquirers need to be able to process payments on time and to scale.

But to learn how a new product – such as a credit card or payment option – will operate in a live production environment

can be challenging for developers, while experiments with back-end payment APIs are next to impossible.

Tribe Payments officially launched in June, and is the first European issuer processor to be certified to allow banks to issue UnionPay International cards. Certification from Mastercard and Visa means that organisations that use Tribe’s technology can issue cards and process payments using the biggest card schemes in the world.

OCTOBER 2019 Publisher Bradley Scheffer | Managing editor Dan Geary | Head of production Maida Goodman | Writers Zita Goldman, Francis Wade | Client manager Veronika Raudonyte | Sales director Paul Aitken | Contact us: info@lyonsdown.co.uk

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State intervention or free enterprise: enabling payment technology Cashless technology has transformed the way the world pays for things – but some nations are more receptive to it than others.

Francis Wade reports

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NLINE PAYMENT technology has transformed the way we make transactions, both domestically and across borders. Rather than queueing at the bank for hours to deposit cash or waiting days for a cheque to clear, we’re now able to send money at the click of the button, or shop and pay for goods without leaving the house.

Payment services providers have successfully capitalised on the shift to online, and in the process brought about a revolution in the ease with which customers can go about their financial business. PayPal, which pioneered the model, has been joined by a slew of other providers, and competition for the sector leadership hinges on three key qualities – speed, security and efficiency – which providers continue to refine.

But as their ubiquity has grown, so too have broader efforts gathered steam to place payment technology at the centre of financial interactions. As part of this there has been a quiet push to “demonetise” economies – to reduce the circulation of cash, and in its place increase the prevalence, and sophistication, of online payment systems. Cash was once king, and banks the castle. Now, however, digital technology is making great strides, and banks are being forced to adapt. The UK financial sector has understood this only too well: the UK is second only to Norway in the number of e-commerce purchases made in Europe, with 87 per cent of retail purchases (not including groceries) having been made online in 2018.

While competition in a free market system has always been a powerful driver of technological innovation, governments the world over have seen the transformative effect of payment technology. Accordingly, they have pressured banks to integrate more sophisticated payment services into their systems, and, buoyed by an inherent desire on the part of companies to take the lead in a competitive market, provided support to the new crop of payment service providers to better refine their product.

In developing countries such as Kenya and Bangladesh, accessing cash has never been easy – the infrastructure isn’t in place to regularly restock ATMs with paper money,

Right: a customer pays with WeChat at a bar in Chiang Mai, Thailand.

Mobile payments are now widespread in China and the Far East, whereas in the US there is far more resistance.

“While competition in a free market system has always been a powerful driver of innovation, governments have seen the transformative effects of payments technology” and significant proportions of the populations live far from urban centres, where most ATMs and banks are located.

Governments there have won praise for their drive to boost mobile phone payment systems, such as M-Pesa in Kenya or the Village Pay Phone Programme in Bangladesh, that have helped to enfranchise millions of rural poor.

Of course, there is fear among businesses that the transaction costs of online payments could eat into their profits. But more government intervention and support would aid the expansion of payments technology, while the greater the competition and prevalence of that technology, the cheaper it would become.

In the UK, government intervention in payment technology has grown in determination. The Financial Conduct Authority (FCA) has set up its own Innovation Hub

with the express goal of supporting businesses, both new and established, to bring new financial products and services to the market.

New paytech is naturally disruptive: it seeks to bring an end to the traditional, and drawn-out, process of making payments via the cashier desk of the local bank branch, instead completing the job at the click of a button. Blockchain technology – in other words, virtual currency issued neither by a bank nor by a public authority – further draws the centre of gravity in the financial world away from traditional banking systems.

But banks themselves have begun to take on a disruptive quality. So-called “challenger banks” are now competing for space with the UK financial giants – Barclays, HSBC, Lloyds and RBS – and bringing to the market a hunger for innovation and

risk-taking in payment technology that traditional banks have been slow to adapt to. At the forefront of their model are online payments, specifically mobile apps such as Monzo and Revolut that are the latest iteration in the paytech revolution. Incubators such as the FCA Innovation Hub provide support for ideas in this field to grow, and reflect a drive to continue the diversification of the landscape.

While much of the western world is now used to contactless card payments, in the US this has been slow to catch on, and it has thrown into sharp focus the reluctance there to part with legacy payment systems in favour of new technology. Only in 2019 has contactless payment been rolled out across the US, long after it has been in a range of other countries – South Korea, China, India, the UK, Italy and elsewhere.

Critics have blamed free enterprise in the US for being an inhibitor, not enabler, of payment technologies, for while banks in the UK had struck common agreements over new payment standards, those in US – a complex and fragmented banking landscape with long-standing legacy systems – have proven reluctant to do so.

Contrast this with China, which has skipped the changes to card technology undertaken in the US and gone straight to cardless payments. A new system, predominatly run through Alibaba (China’s answer to Amazon) and WeChat (a rival to WhatsApp) instead uses QR codes and digital wallets, thereby relegating the central role of banks in financial transactions to what now feels like history. Each platform has close to a billion users, with everyone from big chain stores to market stalls and even beggars on the street employing their services.

This transformation has taken place at lightning speed – largely in the space of a decade – and again throws an unflattering light on how slow and hostile the American system has been to change. In India too, the government-supported United Payments Interface (UPI), a real-time payments system that uses Google Pay and Paytm technology, among others, is used by nearly 150 banks, and has transformed the way millions of India ns go about t heir f ina ncia l transactions.

Government intervention in payments technology across the world has proven to be a boon for a variety of stakeholders, whether customers, retailers, and banks – at least those who get on board. It has had a transformative effect on our daily lives, allowing us to do away with the time burden of traditional payment and replace it with the ease of a single click.

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Opening doors to SME innovation SMEs are traditionally agile, but also vulnerable to the costs of failed developments.

Zita Goldman explores how an open innovation model is a great alternative to gambling the house on a big project all by yourself…

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HE PHRASE “open innovation” was coined in 2003 by Professor Henry Chesborough in his book of the same name. But the methodology of open innovation – which consists of sharing the costs and risks of innovation across an extended network of partners – had already been deployed in the IT sector for almost 20 years, leading to the establishment of new institutions and powerful research laboratories.

In the 1990s the world itself had become a lab: big companies such as Philips and Bayer teamed up with governments and universities to create a vibrant R&D environment to accelerate both innovation processes, as well as the commercialisation of viable business ideas. Then, most recently, in the wake of digital transformation, new tools have emerged such as crowdsourcing, challenge competitions and citizen-science.

That’s all well and good for huge multinationals, but how does this insight translate into the non-technological SME context, where developing technology is invariably regarded as a supporting activity? Well, by relying on open innovation, small and mediumsized companies can acquire new technologies, knowledge and human resources with a minimal increase in budget – avoiding the financial constraints they might normally expect.

As Jon A Frederickson, the CIO of a leading open innovation platform, points out in his blog, huge budgets are no guarantee for successful innovation. Or, on the flipside, even if a company lacks the capacity to develop new products and services internally due to limited resources, it can make up for this handicap by perfecting its ability to create value for customers and marketplaces.

Professor Wim Vanhaverbeke is the author of Managing Open Innovation in SMEs, and co-founded the European Innovation Forum with Professor Chesbrough, which deals with open innovation strategies and SMES practices in the low and medium technology sectors. He describes SMEs’ approach to innovation as intuitive. “In contrast to large companies, their innovative endeavours are based on the informed vision of their leaders,” he explains to Business Reporter. “Reaching out to innovation partners takes place through negotiations between CEOs of the companies involved. Typically, these relationships have no contractual frameworks, but are rather based on trust and verbal agreements.”

Open innovation the SME way Professor Vanhaverbeke is convinced that once an SME opens up to innovation by letting its boundaries become more permeable, its natural tendency to be nimble and responsive to changes on the market won’t be offset by the scarcity of its resources. And, as members of an innovation network, they will only need to pay for technologies if they work for them, which will put an end to the risk of hugely expensive failing tech projects.

Although businesses of this size don’t normally invest in formulating their innovative processes and there is no such thing as an SME innovation

funnel, these networks can operate with considerable nimbleness and efficiency. However, thanks to the lack of an institutionalised framework, when the orchestrator of the innovation ecosystem leaves the business, it often results in the collapse of the whole ecosystem.

“Innovation in non-technological small and medium-sized companies is usually driven by commoditisation,” explains Vanhaverbecke. “As soon as a product becomes ubiquitous, these businesses stand no chance of winning a price war against large players, therefore adopting a new business model time and again becomes key for their survival.”

Vanhaverbecke cites Curana, a Belgian manufacturer of bicycle accessories, as a case in point – a company which was still operating an OEM model in the 1960s when it passed to the second generation. But when the bicycle market became more globalised between 1999 and 2010, placing acute price-pressure on the company, Curana responded by collaborating on a project with a local polymer extruder, which resulted in its successful B-Lite range of mudguards.

“As design became the key differentiator of the new product, Curana gained control over the product and the price,” says Vanhaverbecke. “Encouraged by B-Lite’s success and a fourfold increase of the company’s turnover in the six years that followed,

“Once an SME opens up to innovation, its natural tendency to be nimble and responsive to changes on the market won’t be offset by the scarcity of its resources”

the management decided to first proactively drive customer demand and then finally become the manager of their own brand and a trendsetter of the industry promoting cycling as a lifestyle. Today Curana is the leader of a network of more than 20 partners and a major player of the European bicycle industry.”

Curana’s example, Professor Vanhaverbeke explains, illustrates an essential characteristic of SME innovation: a complete lack of analytical planning. This might sound very much like a shortcoming, but Vanhaverbecke sees it as a new approach to modern problems faced by SMEs. SME innovation is continuous and incremental, requiring a sequential approach as many factors relevant to a project’s success are unknown at the outset. As soon as one business model materialises, new opportunities leading to enhanced bottom lines will manifest themselves – the underlying logic is often that of trial and error.

A pinch of purposefulness Although this play-by-ear approach to innovation can bring positive outcomes, greater purposefulness can considerably increase the efficiency of innovation network creation and management.

Networks need partners who look out for each other and who benefit equally, and it’s down to the leader of an innovation partnership to compensate if some participants are taking higher risks or suffering bigger losses than the others. This kind of strategic partnership means putting more thought into scouting partners that are a good fit to ensure its longevity.

And it’s equally important to know how partners tend to deal with new oppor t u n it ies a nd u ne x pec ted situations.

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Business is looking up – but cashflow is still a concern for UK SMEs D “SMEs haven’t fully embraced apps and payment technologies that could bring the security, efficiency and speed in cashflow they clearly seek” – Colin Close, Elavon

ESPITE THE many challenges facing the UK economy, i nc ludi ng the ongoing concern around Brexit, it seems the country’s small-to-medium-sized enterprises (SMEs) are feeling remarkably buoyant.

According to research by payments solutions provider Elavon – a subsidiary of US Bancorp – 60 per cent of UK SMEs feel positive about growth prospects, 70 per cent feel optimistic in general and 68 per cent believe there are more opportunities now than there were ten years ago.

“SMEs make up the largest proportion of our customers, and a significant portion of the private sector business in the UK,” says Colin Close, managing director, UK & international corporate, at Elavon. “Understanding their perceptions and concerns is critical. Our research highlights that businesses are positive about their growth.”

There are, however, a number of concerns which threaten to hold back the nation’s SMEs. The study found that only just over half (53 per cent) of small firms trade online, and nearly 23 per cent do not even have a website.

Many prefer to build their business by word of mouth or rely on a local or high-street presence but, given the prevalence of social media and the growth of e-commerce, not having the ability to trade online is likely to act as a brake on growth, and a barrier to delivering the kind of service customers now expect.

Then there’s cashflow. Elavon’s research suggests this is the biggest concern for 39 per cent of SMEs, ranking second behind Brexit (51 per cent) – hardly surprising when BACS estimates UK SMEs lose around £2 billion a year as a result of late payments.

But new methods, such as mobile wallet and in-app payments, present new opportunities

for businesses, with faster payments meaning transferred funds can be cleared on the same working day. “While SMEs once lacked choice in payment options, that’s not the case today,” says Close. “It’s surprising that SMEs haven’t fully explored and embraced apps a nd pay ment technologies that could bring the security, efficiency and speed in cashflow they clearly seek.”

The next generation of pointof-sale terminals offers far greater functionality to customers than merely taking card payments.

Elavon’s new Poynt terminals allow businesses to take payments anywhere – in stores, on a smartphone, or through mobile wallets – and see transactions and settlements in real time. They also include an in-built app marketplace that enables businesses to

How can we focus on the work that matters?

W E ARE inundated with an array of technologies in the workplace, all competing for our time and attention. We can communicate, act, create and consume work whenever and wherever.

We’ve become attuned to constantly checking our phones.

The proliferation of technology over the past 15 years has revolutionised our lives, but many feel that its promise of enabling us to work smarter, not harder, has not yet materialised. In the mid-1980s, approximately 61 per cent of workers told pollsters they were satisfied with their jobs. Since then, that number has continued to decline. Today, only around 50 per cent of employees share the same sentiment, according to data from The Conference Board.

Fragmented technologies in the workplace are compounding the issue. A recent study by Pegasystems found that employees juggle between up to 35 job-critical applications nearly once a minute – that’s more than 1,100 times every day. We use email, a host of different file types, various communication tools and project management systems. Not only were these

“Many feel that the promise of enabling us to work smarter, not harder has yet to materialise”

technologies not necessarily designed to work together, but we are still learning how to process all this information and move fluidly between all the different tools in the workplace.

To regain some semblance of personal satisfaction and control, and use the time we have in the working day more effectively to focus on the things that really matter, we need to rethink how we work, collaborate and get things done.

It’s time we make a change. Recent technological advances can still be used for good, but we have to be more thoughtful, more intentional. A more enlightened way of working is to harness the power of technology to align our disparate work functions, so we no longer have to waste time on fragmented and siloed ways of working. We need an intelligent, digital working environment built for how we work today – one that can effortlessly

choose a range of apps for their own needs, including order-ahead functionality and even the ability for employees to check in to work on the devices.

An effective payments solution can also help businesses get online. Elavon recently joined forces with ePages to develop the eShop – an e-commerce platform that can be accessed through its payments gateway to allow retailers to build a branded online presence, including integrating with social media and incorporating built-in search engine optimisation functionality. “It will help merchants develop and synchronise their online and in-store presence so that they can focus on growth,” says Close. “It will help make small firms more competitive against the big boys.”

INDUSTRY VIEW

For more information on how Elavon can help your business, visit www.elavon.co.uk

connect all our platforms and conversations, and harnesses the power of machine intelligence. In a world of technology that erodes workers’ focus, the aim would be to give that focus back.

Getting this right is not only important for employee engagement, but also the bottom line. A recent employee engagement study by AON showed that a 5 per cent increase in employee engagement is directly linked to a 3 per cent increase in company revenue.

What was once was a relentless cycle can become a more tranquil, focused and happier way of working if we use technology correctly.

Technology has unlimited potential, but we’ve seen how it can have a negative impact on people’s daily work. It’s time to build a more enlightened way of working.

INDUSTRY VIEW

Adrienne Gormley is vice president of global customer experience and head of EMEA at Dropbox @DropboxBusiness www.dropbox.com/business

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Local businesses move in as big UK retailers retreat from the high street

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HE UK’S high streets are emptier than they have been in five years, according to a High Street Health study of 3,000 retail centres by the Local Data Company.

Rising costs and lower footfall in physical stores, combined with a greater level of investment in online retail by the country’s bigger retailers, have led to nearly 12 per cent of shopping locations being shuttered at the beginning of 2019, a significant increase from 0.6 per cent during the same period in 2018.

Major chains have suffered the worst of the downturn, with outlets such as Maplin, Toys R Us and Mothercare either going bust or restructuring.

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But the study revealed that smaller firms are better weathering the storm, with only 138 closing during the first six months of the year. Some new small chains are even taking advantage of reduced rents to expand, resulting in a greater presence for local retailers, particularly in smaller urban areas.

“Independents have seized the opportunity available to them to as larger chains consolidate and focus on the key cities,” the report said. “Legacy brands are being forced to radically overhaul their operations, while newer entrants take advantage of available space and the opportunity to capture spend from progressively less loyal consumers.”

ZITA GOLDMAN

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HE EUROPEAN Banking Authority has agreed an extension to March 2021 for payment services providers struggling to meet new PSD2 regulations for strong customer authentication (SCA). The original deadline of September 14 has now been softened, with the EBA accepting that, “on an exceptional basis and in order to avoid negative consequences,” national authorities could provide “limited additional time” to meet PSD2 requirements.

In the UK the official deadline will remain September 14 2019.

However, the Financial Conduct Authority (FCA) recognises the challenges in meeting this, and has been working with the industry to develop a plan to migrate to SCA for card payments in e-commerce as soon as possible.

There is still uncertainty about the phased introduction of SCA. It remains to be seen whether member states will show willingness to align their deferred dates with the FCA’s, and others that put the deadline back until 14 March 2021. The date has been looming on the calendars of banks, non-bank payment providers, e-commerce companies and online vendors alike since January last year, when the EU’s revised Payment Services Directive (PSD2) took effect.

SCA is defined as “an authentication based on the use of two or more elements categorised as knowledge (something only the user knows), possession (something only the user possesses) and inherence (something the user is). These three elements must be independent from one another, so the breach of one does not compromise the reliability of the others.” With the exception of contactless payments, in-person

EBA agrees 18-month extension for struggling payments services providers card payments and other card-based payment methods such as Apple Pay and Google Pay are not impacted

by SCA. A study conducted in June by 451 Research forecast that Europe stands to lose €57 billion in economic activity in the first 12 months after SCA takes effect, mostly thanks to the added friction in payment processes.

It is also estimated that with a dropdead date on 14 September, 25 to 30 per cent of online transactions would have been rejected.

Also, according to PSD2 rules, merchants can shift liability for transactions to issuing banks provided they are SCA compliant.

Online merchants could either stick

with more expensive card-payments that SCA doesn’t apply to, or become early adaptors of the new security payment regime within the transitional period in order to reduce risk.

SCA is the third pillar that the digitalisation of the banking sector is to be built upon, the other two being GDPR and open banking.

While open banking levels the playing field in the banking sector by obliging incumbent banks to provide payment service providers with access to their clients’ accounts and banking data and GDPR regulates how account holders’ data should be treated, SCA is meant to make card-not-present push payment transactions between accounts safe.

The 18-month adjustment period also implies that third-party providers (TPPs) should be able to continue using existing screenscraping methods (the act of copying data from a computer programme to what are often legacy systems) to access payment accounts online, which is in conflict with open banking’s primary objective of making payments safe through the use of APIs. With screen scraping the payment services user has to share their login and credential details with third parties, who can then have access to all account information, not just the parts that are pertinent to their account information or payment services.

Why SMEs can learn a lot from project management

W

ITH SMALL-TO-MEDIUMSIZED enterprises (SMEs) employing more than 16 million people in the UK private sector according to government figures, it’s clear they play a crucial role socially and economically.

In fact, our study with PwC, The Golden Thread, reveals that project management contributes more than £156.5 billion to the UK economy annually – and there’s a lot for businesses of all sizes to learn from project managers as they seek to grow and innovate.

Great project management skills and techniques can help SMEs create better growth plans, implement better ways of working and keep on top of

regulatory changes, such as Making Tax Digital, which is now a requirement for VAT returns.

When projects such as these are identified, SMEs can often rely on “accidental project managers” – competent employees without any project management skills who are left to figure it out for themselves.

They don’t have the knowledge, experience or training to manage a scalable, complex project from start to finish, which means that, a lot of the time, money and efficiency can be at risk. The question SMEs have to ask themselves is whether they can afford to take that risk?

Entrepreneurial SMEs often subscribe to the “fail fast” approach, but

by using project management techniques they can better define what success looks like. It can also help them to better evaluate their work, create more innovative solutions and lay a path to seeing the bigger picture.

Smaller businesses will always need to be flexible, proactive and have an aptitude for embracing uncertainty, but they’ll fare even better if they consider gaining solid project management skills.

INDUSTRY VIEW

Debbie Dore is chief executive, Association for Project Management @APMProjectMgmt www.apm.org.uk

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Augmenting your workforce Intelligent automation is enabling expansion of the augmented workforce, which can be harnessed to an ever-greater degree

“A

UGMENTED WORKFORCE” is a term we hear increasingly often these days, but the concept is hardly new. Think, for example, of the cotton mills of the Industrial Revolution. Scores of looms were driven not by the millworkers, who had other tasks, but by a series of steam-powered belts, resulting in a larger production output, higher quality, and new ways of working t h at c ombi n e d hu m a n s a n d machines.

However, as the cotton mill example shows, it’s important not just that technology delivers benefits like these, but that it does so in concert with the human workforce. That’s where AI can really take off – when you combine it with people, you create an outcome that is greater than the sum of its parts.

Capgemini has been developing a methodology that orchestrates tasks between people and machines – whichever of them is most appropriate in individual cases. It comprises three steps: • Identifying tasks that can be performed better and/or faster with AI • Measuring the value that AI can add • Designing human-in-the-loop solutions when the expected efficiency is not reached by machines alone.

The term “orchestration” is a good one, because implicit in it is a sense of fluidity – areas and occasions when, as it were, either people or technology will be playing solo, and other times and places when they will be playing together.

T h e a l g or it h m s we u s e gauge possible outcomes and use formulae to create human-in-theloop solutions in which the process efficiency is better than machine-only, but is

achieved at a cost that is much lower than person-only. This truly is augmentation in action.

We’re working with clients to build an augmented workforce approach in functions including finance, the supply chain, human resources, and contact centres, to name just a few.

We help them identify their needs and shape their response; we create a model for them; and we help

them execute it, so as to achieve the outcome they seek.

It’s paying real dividends, and not just for the business, either. As this new approach to tasks consolidates itself, we’re seeing the workforce change. People are acquiring and using skillsets that didn’t even exist a few years ago. Why? Partly because the technology requires an understanding of the new world of intelligent automation, and partly because people are now freed from the repetitive tasks of yesterday, and are able to focus on the increased value they can bring to the business requirements of today and tomorrow.

Intelligent automation is streamlining processes, and is weaving itself into the fabric of the modern enterprise, thereby benefiting the organisation, the workforce and the customer alike.

In a way, perhaps, we’re not so far from that cotton mill after all.

INDUSTRY VIEW

Dr Adam Bujak (left) is global head of Capgemini’s Intelligent Automation Offer @BujakDr adam.bujak@.capgemini.com

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Fears of the dark: SMEs are taking the brunt of Brexit uncertainty Brexit uncertainty is already changing how Britain’s smaller firms are approaching business.

Francis Wade examines what the increasing likelihood of no-deal really means

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OT SINCE the 2008 financial crash has the landscape for business in the United Kingdom been more precarious. Much of the analytical focus on the UK’s looming exit from the European Union has been on how large companies will be affected by new tariffs and a hard border in the once free-flowing trading bloc. But small-to-medium enterprises, which make up 99 per cent of UK private sector businesses and serve as key engines of innovation and growth, are expected to be hardest hit. Some 240,000 of these trade directly with EU countries. The effect on the UK economy over the coming years could be significant.

SMEs are inherently less resilient than large firms, and they respond poorly to political and economic uncertainty. Surveys show that a majority are already fearful of how Brexit will impact on their growth and survival, with more than a million SMEs saying they saw Brexit as a major obstacle, according to analysis published in academic journal Regional Studies.

Many have already sought to mitigate any likely shocks by scaling back capital investment until such a point in the future when the economy stabilises. This is particularly the case for the more innovative, export-oriented SMEs, which have tended to contribute more to the expansion of the UK economy, with economic forecasts suggesting that Britain’s withdrawal from the EU will trigger a range of negative consequences for them: weaker growth, poorer innovation, a reduction in capital investment, reduced product development, a reluctance to pursue further inter nat iona lisat ion of t hei r

business, and lower access to external finance.

Given the particular nature of Brexit’s probable long-term effect on the UK – not only that it will trigger a temporary economic downturn, but that it could fundamentally change how business is done here – preparation is difficult. For those who import or export to EU countries, a close understanding of how changes to tariffs and border controls will be vital to mitigate the impact on productivity. Many SMEs have admitted that they are stocking reserve capital and reducing unnecessary expenditure in order to be better shielded from whatever comes next – whether a rise in fuel prices, food prices, or new bureaucratic hurdles that will further slow the dispatch and arrival of goods.

Then there is the highly sensitive question of work force make-up. Immigration checks are sure to intensify after Britain leaves the EU and any businesses with staff whose settlement status is still uncertain need to ensure they do everything they can to support them with proper documentation for the relevant application processes. Staff will take any ejection from the UK deeply personally, and businesses will take a hit both organisationally and economically.

Software giant Sage released a white paper in February which

Brexit has already caused the UK’s SMEs to change tack – and a no-deal exit could place huge further strain on them

cautioned of the impacts that a no deal Brexit would have on SMEs. It advised companies to prioritise engagement with suppliers, logistics providers and, importantly, customers, to set realistic expectations of how supply lines would be affected in the short term. The paper encouraged SMEs with a European workforce to review the UK government’s advice on settled status, including the employers’ toolkit and right-to-work tool, and create policies for retaining or hiring non-UK EU nationals. New EU authorisations will also be needed for businesses involved in financial services and pharmaceuticals – sectors which are subject to strict EU regulations – to supply to the EU market. New guidance, says Sage, will require close study, and labelling on products will need to be inspected to ensure it doesn’t require updating.

SMEs have reported mixed experiences of UK government support for small and medium businesses in the face of Brexit.

In December the government released £8 million in funding to help SMEs with employee training and IT improvements to complete new customs declarations. As of August, however, only 741 companies had applied. This may suggest that SMEs are unaware of the existence of such support, with indications that the government had done little to publicise

the funding. In its place, large businesses have stepped in to help: in March, Barclays Bank unveiled a £14 billion fund to help SMEs via loans, overdrafts, commercial mortgages and funding for investments, and also held “Brexit clinics” in local communities across the country.

But, of course, there’s another side to the coin. OCO Consulting’s Global SME Brexit study, published in 2018, found that more than a third of UK SMEs surveyed – including export-oriented firms – felt that Brexit might actually be to their benefit. Thirty-seven per cent had picked up new customers and contracts since the Brexit vote in 2016, while 36 per cent increased sales with existing customers. The falling value of the pound has led to more competitive prices, and in turn an export boom that has benefitted the manufacturing sector in particular – so far.

Yet the increasing likelihood of a no-deal Brexit on 31 October changes the picture dramatically.

The uncertainty over how business will fare if no agreements can be reached by the departure date make for significant economic anxiety. We know that SMEs, those vital engines of growth, respond poorly to this, and once we are able to measure the impact their weakening will have on the UK, it will likely be too late to do anything.

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Money for new rope: how the old guard is waking up to payments technology Payments tech is not new, but only recently has it begun to influence the big beasts of banking. Francis Wade examines how fintech start-ups are now leading the narrative

N

EW TECHNOLOGIES have had a dramatic effect on how people manage their finances, whether it be online banking or transactions via digital payment platforms. For the growing array of competitors in the world of financial technology, and particularly those operating in payments technology, or paytech, it is in the arena of customer service where they prosper or die. One survey found that 96 per cent of B2B buyers reported the quality of customer experience as a key determinant in whether they would buy from a brand a second time. The efficiency of paytech is vital to that experience, and so crowded is the field that unless platforms strive to optimise speed, ease and security in transactions for customers, they will lose out.

The financial services sector has invested heavily in shifting payments from the physical realm to the virtual realm, and in turn advancing the capability of online payments. Slow payment processes do more than just frustrate the user – they are also a significant driver in cart abandonment, with resulting losses for the company. If a customer feels frustrated by the buying experience, they will pull out and likely not use the brand again – and SMEs feel this particularly hard.

Surveys have found that the rate of cart abandonment for e-commerce orders in the UK averages at around 75.8 per cent. While the biggest reason is a lack of initial commitment

“Incumbent banks have struck out to either build better user experience in-house, or team up with emergent fintech companies that only a decade ago served as major disruptors of the banking sector”

to a purchase, with customers simply browsing for goods, both lack of payment options and “technical issues” – two areas intimately connected to the quality of payment platforms – account for one in 10 cases of cart abandonment before checkout begins. Once they are into the checkout process, however, the problems for payments technology become even starker: more than a quarter of customers responded that a “long or complex process” prompted them to withdraw from the transaction, one fifth couldn’t “see total cost”, and 6 per cent experienced a “lack of payment options”.

New platforms have sought to smoothen the process by removing the need for the customer to input bank or credit card details each time they make a purchase. PayPal was the first in a line of paytech pioneers to facilitate online transactions at the click of a button. Shopping sites that offer the range of tools with which to make a payment, and who even allow for deferred payment or credit options if neither card or PayPal transactions are appropriate, will likely generate higher rates of customer satisfaction than those that don’t.

The need for the financial sector, and the brands that use its services, to continually keep on track with developing technologies – and to understand how new technologies impact on the expectations of customers – has triggered a shift in alliances between old and new.

The result is a fundamental remaking of banking and a change to the way consumers define what is convenient in their finance-related experiences.

Having realised the dangers of being outflanked by more efficient services, incumbent banks have struck out to either build better user experience in-house, or team up with emergent fintech companies that only a decade ago served as

Right: London’s Royal Exchange.

The world of traditional pinstriped and bowler-hatted banking is now at risk of being overtaken by tech giants ahead of the curve when it comes to paytech and better customer service

major disruptors of the banking sector. The alliance has helped to overcome problems that until fairly recently seemed insurmountable, with the easing of cross-border trade being one area in which that alliance has borne fruit. International payments had been intrinsically difficult due to a range of factors – multiple currencies, the lack of a single global payment system, each country having unique laws and systems around banking and trade – but the linking of personal and commercial accounts to paytech platforms such as PayPal has changed the way in which those transactions are made.

This is especially the case at the individual level, where international payments can now be made with comparat ive ease f rom a smartphone.

In a nod to the importance of customer retention in maintaining growth, the emerging alliances between traditional banks and fintech companies have tended to centre around customer service provision, and user-friendly digital payment applications in particular.

One study found that “digital banks are able to increase their capitalisation by 3 per cent on average for every strategic alliance initiated.”

Fintechs, which are increasingly branching out into areas such as f raud prevent ion a nd customer profiling, have several

characteristics that appeal to the banking industry – traditionally one of the most conservative sectors of the economy and notoriously slow to adapt to digital challenges. They tend to be young and smaller in size, which allows for greater agility and innovation than many other elements – especially banks – in the finance sector.

They are also more willing than incumbents to take risks, and this in turn has significant repercussions for the competitive framework within which banks operate their online payments. Do they stick to safer options that, while bringing greater security to transactions, may nevertheless be more secure, or do they follow the fintech mantra of risk equalling reward and push for systems that bring greater efficiency to the process? While older, more risk-averse generations of consumers may stick to transaction systems that are perceived to offer greater security, millennials demand speed and efficiency, and anything that reduces friction and difficulty.

But while the longevity of incumbent-fintech alliances are unclear, with fintechs seen to be serving both as allies and rivals of traditional banks, close co-operation between the two has left an emerging player in the finance sector somewhat out in the cold.

New bank charters – or “de novo banks” – have been around for some time, but their growth took a big hit in the wake of the 2008 financial crisis. As economic conditions have improved over the past three years, however, the rate at which applications for formation are being filed has accelerated. So too has the orientation of de novos changed, with more of a focus now on supporting “creators” – start-up businesses, families, charities, and so on – or communities that may not have a history of using traditional banking services. In essence, they have sought out a niche that

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The number of full account switches completing in Q1 2019 40,000 NET ACCOUNTS OPENED

Starling

Monzo

10,000

NatWest

20,000

Santander

30,000

HSBC

Every bank both loses and gains customers over the course of a year. But current trends seem to indicate that smaller challenger banks are doing better when it comes to balancing the account retention books. HSBC and Santander in particular have made net losses, while Monzo and Starling are picking up more accounts than they’re losing.

Nationwide

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10,000

20,000

30,000 ACCOUNTS CLOSED

SOURCE: PAY.UK

40,000

incumbent-fintech players have yet to fill. While incumbents scramble to make up for lost ground in customer service, this aspect has always been at the heart of the de novo mission. And because they tend not to have the capital to invest or partner with fintechs, they remain somewhat of an outlier in a banking industry in which old and new have teamed up.

But despite the resurgence of de novos, fintech remains the sector to watch. Its powers of innovation and risk-taking have led to ever heated competition, particularly between online payment platforms. And where PayPal was once predominant, new players have come into view.

Adyen was founded in 2006 as a platform to enable businesses to accept e-commerce, mobile, and point-of-sale payments. Although it has been around for nearly 15 years, it was the news in 2018 that it was replacing PayPal as the primary payment processing partner for eBay that brought it greater attention.

Adyen claims to go where competitors do not – it accepts payments anywhere, on any device, while businesses that use it get customer insights data, revenue optimisation and risk management to protect their business using data. Its use of the Interchange++ pricing model allows it to track rates and scheme fees down to a transaction level, meaning that, in the company’s words, “we can calculate the cost of each payment even before it is completed.” This brings far greater visibility to the process, and means that customers can see exactly what the charges are for each transaction they make.

Other newly formed platforms, such as Stripe, seek prominence via different qualities: developer-centric features that allow for better customer interaction with, and bespoke management of, the platform. With mobile bank ing now hav ing

“The arrival of the tech giants in the banking sector perhaps poses more of a risk to traditional banks than fintech services once did”

surpassed branch and online interactions with customers, the value found in efficient payment services – both for the customer and the brand using the platform – is vast.

It is for this reason that the sector has gone through another iteration, with non finance-oriented platforms such as Facebook, WhatsApp and Singapore ride-hailing firm Grab having now shifted into financial services. The two messaging giants have recently introduced mobile payments to their platforms, while Grab, with its rich data on customer behaviour, has sought to boost the entrepreneurial wherewithal of its home region, providing loans to millions of people across Asia who do not have access to traditional banking systems. While WhatsApp Pay is currently only active in India, which has served as a testing ground for the new service, it is only a matter of time before it goes global.

The arrival of tech giants in the banking sector, with Microsoft, Apple and Google joining Facebook and other household names, has had a transformative effect, and perhaps poses more of a risk to traditional banks than fintech services once did. The likes of Google and Apple naturally focus more of their energy on data management, while e-commerce firms such as Amazon seek input from those who can create as frictionless an experience for customers as possible.

While it is uncertain how the banking sector will evolve from its current position, it is clear that growing competition will drive further innovation centred around improving the customer experience.

Who will rise to the top remains to be seen, but the crown must surely go to the platform that offers an integrated delivery of services, excelling not only in security, speed and ease, but in all three.

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W

HEN JUGGLING multiple tasks, serving customers and developing the business, finding the ideal energy supplier rarely ranks at the top of the priority list for any small business.

Ofgem, the UK’s gas and electricity regulator, published a report in 2018 which found that more than two-thirds of small businesses had gathered prices from energy suppliers, and half of those either switched supplier or negotiated a better price with their current one. This is great news for all small business owners, as it shows that navigating your way through the energy market doesn’t have to be as daunting as you might think.

Switching suppliers because you’re offered an attractive incentive may seem like the right thing to do. However, understanding the product you’re being offered and the overall costs you’ll be charged during the course of the contract is more important.

Affordability is critical, as is understanding the price you’re paying for your energy and all that comes with it, such as metering costs and taxes.

Other aspects to consider include understanding the terms of your energy contract and what that means to you and your business, knowing when you’ll receive your invoice, and the turnaround times for answering your queries.

The rollout of smart meters, that automatically measure the amount of gas or electricity your business is using and send readings directly to your supplier, is the first step towards enabling the industry to manage energy flows throughout the day.

Businesses that understand their peak energy usage periods can adjust their consumption, which in turn can lead to them lowering their energy consumption and costs.

As director for small business at Total Gas & Power, Peter McLeod explains: “If a small business owner wants a smart meter, they should ask for one! Why wait? Business energy, specifically gas and electricity, is not as complicated as many small businesses think. My advice is to treat energy suppliers as you would any other supplier – know what you want as well as what you don’t want, and only agree to a contract once you understand it.

“It’s vital to be clear about the price you’re paying and what it means in terms of monthly or annual costs for your business.

Some suppliers will offer one rolled-up price. This means other associated charges for your supply, such as meter-related charges (standing charges) are included in the price of your energy. This is the pence per kilowatt hour, which is the price you pay for every unit of energy your business uses. The unit price is a clear driver in what you’ll spend, but don’t forget, the cheapest unit of energy is the one that you don’t use!

“Other suppliers will separate out the standing charge costs into a price per day.

It’s important that you understand what this means in terms of monthly outgoings as you’re effectively dealing with two separate costs that will appear on your gas or electricity bill. Ask your supplier to help you calculate these costs. Knowing the

Energising your business

Peter McLeod, director for small business, Total Gas & Power

overall monthly expenditure is often more meaningful for a small business.

“Small businesses are my passion, as is helping them to thrive. I see it as my responsibility to demystify energy for them and help them to make a decision that is right for their business”.

Fixed prices offer protection against price rises during the contract term, but if energy market prices increase, the business may need to prepare themselves for price rises when their contract comes to an end.

Peter McLeod continues: “Running a successful business and increasing the bottom line is important for creating success but also for paying for life’s pleasures. This might be days out, meals with family and friends and long-awaited holidays. Any decision a small business owner makes can impact their bottom line and therefore their ability to invest in their business or spend time enjoying life outside of work.

“Some businesses prefer to work with an energy broker or use a price comparison website, many of which offer valuable services that can help ensure peace of mind.

“Small businesses are my passion, as is helping them to thrive. I see it as my responsibility to demystify energy for them and help them make a decision that is right for their business” – Peter McLeod, Total Gas & Power

There are two elements that are common between us all – small businesses, brokers, comparison websites and suppliers – and that’s our desire to help others while making money.

“For businesses who prefer to work with a broker or comparison website, my advice is to be clear about the capacity in which the broker is working on your behalf – and how much you’re paying for their services.

Some will separate out their charges while others will include their fee in the unit rate or daily standing charge. These elements may not be highlighted on your invoice, so if you already use a broker and you’re unsure what you’ve been charged, ask them or speak to your supplier. Make it your business to understand.”

Whichever approach is right for your business, don’t be rushed into a decision.

Whether you choose to deal directly with suppliers or appoint a broker, take time to understand the product and the terms of contract.

Assure yourself that the supplier meets your requirements, whether that be regular communication on future price impacts, sourcing of green gas and electricity or support with the latest energy saving technology.

Remember: the right energy supplier is the one that works with you.

INDUSTRY VIEW

To find out more about how Total Gas & Power can help you and your business, visit connect.totalgp.com/sme

Steps to a better energy deal There’s more to getting a good energy deal than finding the cheapest quote. While you’re comparing providers, look for the following qualities: • An established, reputable company.

You’ll want a service provider with a trusted track record and experience of working with SMEs. • Proven customer service. If something does go wrong, the customer service team should be easy to access, responsive and helpful.

• Regular, informative communication.

A good provider should be willing to talk you through developments in the energy markets and demonstrate that the service they provide is tailored to your needs.

• Adaptability. As your business grows, requirements will change. Your energy supplier should be able to assist with meter upgrades, site connections and disconnections, and help you understand and install energy-saving technology.

• Accuracy and clarity of bills. Your provider should show costs up front and have clear, easy-to-read bills.

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Out of the banking loop The challenges and opportunities ahead for financial institutions serving SMEs

F

OR MANY start-ups, especially SMEs, getting the business up and running is the easy part. They have a great idea and they know how to bring it to market. But the issue keeping new and small business owners up at night is banking. With no two SMEs alike, banks – be they incumbent or challenger – are not always able to provide small and medium-sized businesses with the flexible, fast-paced solutions they need.

Depending on the size, structure, ownership and history of the business, and the bank they speak to, the banking options available to SMEs vary dramatically – yet rarely suit the business imperative. Application and set-up takes too long, costs are out of reach and credit repayments are inflexible.

As a business passionate about increasing financial inclusion for SMEs, Banking Circle commissioned MagnaCarta Communications to carry out research into these issues. The first report, Financial Inclusion for Europe’s SMEs: Building a Circle of Trust, was published in June 2019.

We are now publishing a second report, Circle of Trust or Out of The Loop?, which will be launched at Sibos 2019. This includes insights from some of the people working in the midst of the challenges and the solutions hitting the market today. Speaking to these experts gave us first-hand insights and experiences, uncovering where changes are happening, where opportunities exist and where barriers are beginning to come down to improve SME financial inclusion.

Thankfully, providers are finally beginning to realise the potential held by the SME banking market.

Broadening SME banking horizons “SMEs are still not top of the agenda for most financial services providers, but many are waking up to the benefits,” said Valentina Kristensen, director of growth and communications at OakNorth Bank. “They are realising that if they get an SME on board, they will be loyal and bring multiple cross-selling opportunities.”

As the Banking Circle report shows, bringing about real change and better financial inclusion for SMEs requires market participants to work together and develop joint solutions, collaborating to build bridges between individual innovations already in the market.

“We are creating a new ecosystem of financial services providers, in partnership with other providers such as Banking Circle, to establish a

new era of financial services which will better service customers and SMEs in the banking space,” Roger Vincent, general manager (UK&I) and CIO of Trade Ledger, commented. “If we better serve the banking space through the incumbents, then the SMEs will benefit greatly as they can access the services they want.”

However, as the latest Banking Circle report shows, the progress and potential achievements will remain limited until further collaboration, communication and joined-up thinking becomes commonplace within the financial services industry.

As with any ecosystem, it must be perfectly balanced in order to function effectively. Only with all types of providers working together in collaboration, not competition, will the banking ecosystem be able to bring financial inclusion to its peak.

INDUSTRY VIEW

Visit BankingCircle.com to register for the new Banking Circle Insight paper, which will be launched at Sibos 2019, and to download the report Financial Inclusion for Europe’s SMEs: Building a Circle of Trust

Payments: where consumers lead, businesses will follow T “The IT systems on which the traditional banks are built are up to 50 years old and no longer fit for purpose”

HE PAYMENTS industry has seen huge innovation over the last five years, and consumers are reaping the benefits. Unfortunately, the benefits to the business world have been slower to materialise. However, banks that traditionally viewed fintechs as the “enemy” are now considered valued partners, and that is good news for developing businesses.

Debit cards aimed at travellers, the growth of money transfer services, mobile-only neo-banks, big tech racing to be a payment method of choice and the ubiquity of digital wallets in Asia are just some of the huge changes consumers have seen. It is only a matter of time before these innovations reach businesses.

It begins with banks, but takes off with fintech The IT systems on which the traditional banks are built are up to 50 years old and are no longer fit

transparency traditional banks struggle to offer.

And while technology and regulation have brought massive change, perhaps the single biggest change is the customer.

The biggest drivers of change will be businesses and their employees

for purpose for today’s demanding customer. But, given the absence of competition and the high cost of upgrading, the incentive for banks to innovate has been lacking.

Until now.

This has coincided with the efforts of regulators to increase competition and develop a finance industry fit for the 21st century.

New legislation gives third parties access to core customer

information to deliver services previously monopolised by banks.

At the same time, emerging technology and an entrepreneurial spirit has led to these companies creating services that benefit business and compete for banks’ customers. For example, Currencycloud allows businesses to avoid some of the charges associated with international payments while delivering the speed and

Millennials and Generation Z are the core of the future workforce.

They are digital natives for whom living online, on the move and where almost everything can be accomplished with a finger-swipe on a mobile, is entirely natural.

So when a neo-bank such as Starling offers them a whole new way to bank, or when Apple allows them to pay with their watch, or Revolut offers savings on holiday money, they take it. When you see the ubiquity of digital wallets such as Alipay and WeChat in Asia, you can see a future where the traditional banks are no longer the core of the financial system.

When new services make life simpler, easier, faster or cheaper, why stick with old, traditional, opaque and costly alternatives?

As the younger generation’s responsibilities grow in business, they will develop a similar approach to their business banking as that with personal banking – they will move for a better service.

Traditional banks must adapt.

The quickest route for banks to do this is through partnerships with fintechs. The cost of building new core banking technology is prohibitive but partnering with fintechs is not. We are seeing more and more banks move in this direction. It is their lifeline to keeping their customers.

And the big winners? The customers.

INDUSTRY VIEW

Mike Laven is CEO, CurrencyCloud @Currencycloud www.currencycloud.com

October 2019

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Enabling alternative payments in a centralised world

I

N ALMOST every nation around the world, financial institutions continue to play a critical role in our everyday lives, responsible for facilitating the majority of global economic activity. However, this farreaching influence does not come without challenges. Although the centralised nature of financial institutions and government-backed currency is a stabilising force, it also results in an imbalance of power.

By relying on intermediaries such as banks and other financial services providers, consumers inherently allow centralised institutions to amass even greater influence. And while fiat currency and bank-driven networks have done much to propel us forward, many believe it’s time to put power back in the hands of consumers. As a decentralised, inte r me d i a r y-f r e e te c h nolog y, blockchain presents a promising opportunity to do just that.

Blockchain and crypto-assets for payments

Why alternative payment networks?

Just as banks maintain networks for fiat currency, blockchain technology acts as the underlying framework for crypto-assets. However, unlike conventional financial institutions, blockchain technology transcends national borders. Although this functionality continues to generate a vast array of use-cases, payment solutions have seen considerable success.

Since the emergence of Bitcoin in 2009, countless projects continue to explore infrastructure that aims to transform the way we transfer value.

According to the Cambridge Centre of Alternative Finance, 49 per cent of all crypto-asset service providers facilitate payments. And while there have been many success stories, obstacles must be overcome before blockchain-based payment solutions achieve mainstream adoption.

Alternative payment networks using blockchain technology offer several benefits to consumers and merchants.

Because blockchain networks operate without an intermediary, transaction fees are typically much lower. For consumers sending or receiving funds, these fees can be 3 per cent or higher.

For merchants, debit and credit card processing fees average 1.5 to 3.5 per cent, taking a bite out of profits. In contrast, blockchain payment networks charge only a fraction of this amount.

This dynamic is likely why 57 per cent of crypto-asset service providers offer merchant payment solutions. Also, traditional banks often require up to three business days to process a transaction, whereas blockchain-based payments can see settlement within minutes or even seconds.

However, there are also market factors and technical limitations that

remain inhibitive to future growth.

The primary challenge to future blockchain-based payment solutions is scalability. VISA reports processing approximately 150 million transactions per day. In contrast, the Bitcoin network currently averages 350,000 transactions per day. Although this is problematic, next-generation blockchain networks such as IOTA and Ripple aim to improve scalability dramatically. It’s also no secret that crypto-asset prices are volatile.

Because most fiat currencies are generally stable, they are a far more reliable store of value.

of a centralised world. By removing intermediaries, consumers and merchants can retain more of their hard-earned money while accessing global payment solutions.

As companies such as Facebook and IBM continue their foray into cryptoassets and the payment networks associated with them, mainstream adoption inches ever forwards. Surging institutional interest in crypto-asset markets further highlights this growing momentum. However, the systemic challenges must be overcome if we are to reap the benefits of this promising application of blockchain technology.

The growth of alternative payment infrastructure

INDUSTRY VIEW

The trend towards decentralisation appears poised to continue in the face

@copperhq uk.copper.com

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Paytm You can use Paytm to pay and transfer

money for all sorts of things directly from your mobile – from utility bills and money transfers to online shopping and movie tickets.

Cash App Cash App lets you send money directly

to anyone with a mobile or email address, by linking your debit card to your phone – although transfers can take up to a day to arrive.

Bottomline PT-X Payments and Business Solutions Suite This app lets you manage your

invoices and includes BACS and Direct Debit processing and Financial Document Automation.

Skrill Skrill is a world-leader in global payment

solutions for people’s business and pleasure, whether they’re depositing funds on a gaming site, buying online or sending money to friends.

WePay This digital wallet app lets you manage your payments and funds in your own time, and lets you make utility bill payments using your credit card, debit card or bank account.

Sage CRM This app gives your sales team real-time

access to Sage CRM sales and contact data using Android devices, keeping them up-to-date with their latest sales activities.

HubSpot HubSpot is a full suite of sales, marketing and customer service tools that lets you manage your deals, contacts and tasks on the move, and stay connected to your leads, customers and team.

Mailchimp Mailchimp lets you put together and

send email newsletters, share them on social networks, and track your results. It includes a bulk mailer so you can mail unlimited recipients.

Asana You can use Asana to quickly capture tasks,

to-dos, reminders, and ideas. Get updates from teammates, organise tasks and projects for work, or manage your to-do list for the day.

Invoice by Wave An invoicing-on-the-go tool

for freelancers and contractors that lets you send unlimited customised, professional invoices. Free, with optional paid upgrades.

Fighting future fraud: risk management strategies for e-commerce companies

D

ISCLAIMER: ONE-OFF fraudulent transactions are nigh impossible to prevent. That being said, the (unfortunate) reality of the situation is that one-off transactions are also rare. It’s just too much hassle for would-be cybercriminals to steal sensitive consumer data for a single payout. They’re in it for the long haul, which means they’ll be registering new accounts in an attempt to maximise their efforts. And that, incidentally, is what’s going to lead to their inevitable identification.

As soon as suspicious individual transactions are analysed cumulatively, a pattern of suspicious behaviour emerges. It’s this

pattern that makes it easier for advanced risk-management platforms, such as payment service provider and acquirer ECOMMPAY’s FraudStop system, to recognise those individual transactions as belonging to specific cyber-criminals.

FraudStop applies the scoring principle, learning on the basis of AI to establish consumer fingerprints. Consumer fingerprints, in turn, help the risk-management system pick up on irregularities in established behavioural patterns to identify fraudsters by digital trace and device.

The scoring system assesses each transaction processed by the acquirer or payment service provider for its merchant client against a series of preconfigured filters,

which are arranged into a specific set of rules depending on industry sector and other relevant variables. The filters, when triggered by the system, combine predetermined values to calculate a score. This score is then assessed by the security system to determine the likelihood of the transaction

being fraudulent, after which it is either accepted, rejected outright, or routed for manual review.

The best approach for e-commerce businesses looking to reduce financial losses associated with unauthorised transactions is to partner with a payment service provider offering a solid security strategy with a proprietary risk management solution that is technologically adaptable to new threats and bolstered by in-house expertise.

INDUSTRY VIEW

Paul Marcantonio (left) is head of UK/ Western Europe at ECOMMPAY info@ecommpay.com www.ecommpay.com

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Looking to start, grow, scale up or exit a business?

S

TRATEGY CAN be sidetracked in the day-to-day running of a business, and scaling up can take the back seat as you end up dealing with piles of paperwork, projects going wrong or dealing with an overflowing inbox.

This shows in the statistics – according to the ScaleUp Institute, scaleups bring in £1.3 trillion of the £1.9 trillion generated by all UK SMEs. The remainder is brought in by millions of companies not making anywhere near as much of an impact as they could.

There’s clearly more than a few secrets business owners need to learn about scaling up.

Fortunately, the Festival of Enterprise will reveal them all.

More than 150 experts in business growth will take to the stage at the Festival of Enterprise to share their secrets with other business owners. This is where you can learn from real experiences, hear how speakers went about getting the funding that enabled their growth, how they expanded their management and delivery teams, the big obstacles they overcame and the ways in which they reshaped their plans as they grew.

The Festival of Enterprise is designed to provide owners of established SMEs and start-ups with the tools and information they need to achieve fast growth.

The Festival of Enterprise takes place at the NEC Birmingham on 23-24 October. Free entrance passes can be obtained at www.festivalofenterprise. co.uk.

INDUSTRY VIEW

hello@festivalofenterprise.co.uk www.festivalofenterprise.co.uk

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“Given that in many advanced economies they make up a vast majority of companies, it goes without saying that SMEs need to follow the trend towards embracing digital technologies”

Business Reporter UK

@biznessreporter

G

OVERNMENTS KNOW there is significant growth potential to be had from SMEs. In most OECD countries, they constitute more than 95 per cent of enterprises, and account for up to 70 per cent of jobs, and are thus vital features of any economy. These agents of change are considered important vehicles for creating jobs and driving expansion, and as a result they tend to receive significant state support, whether in the form of tax exemptions or a range of other incentives to boost their formation and growth.

But the relationship between SMEs and the state is not wholly harmonious. While governments tend to want to cultivate an econom ic a nd tec h nolog ica l environment in which SMEs and entrepreneurship can prosper, they can also be subjected to tight regulatory measures that can actually hamper their growth.

Many don’t make it past the fiveyear mark – regulation is too excessive, they divert too much resource to administrative functions. Because of their size relative to larger and better-equipped firms, they are also not so adept at managing the red tape and spreading the cost of compliance.

These powerful drivers of growth and job creation are often therefore killed off in their infancy.

Governments have come together to seek ways to reduce the burden on SMEs, granting them stronger privileged treatment, improving availability of information and training, and lowering the legal barrier to entry and reducing costs for regulator y compliance. They have also been encouraged to boost their digital acumen. Given that in many advanced economies they make up a vast majority of companies, it goes without saying that SMEs need to follow the trend towards embracing digital technologies.

In Singapore, for example, where the SMEs Go Digital initiative was launched in 2017, SMEs “make up 99 per cent of companies, two thirds of the workforce and contribute to 50 per cent of the country’s GDP”. For e-commerce, digital technologies make buying and selling much easier; for startups of all stripes, they help to drive innovation, and this is where SMEs add significant value to an economy.

SMEs have been aided in their quest by de novo banks – new bank charters that have seen a resurgence in recent years following a major downturn in the wake of the 2008 financial crisis. It was de novo banks that became key lenders to small businesses during

How tech is loosening regulatory strings so SMEs can flourish SMEs benefit from government aid, but restrictive regulation can also hamper growth. New technology could help, writes Francis Wade the bank consolidation phase in the US in the early 2000s, when many of the major banks underwent mergers and acquisitions and reduced their financing of SMEs. As a result, de novo banks stepped into the gap left by the larger banks.

De novo banks have historically had a larger proportion of SMEs in their portfolios than incumbent banks, in keeping with a trend in which smaller banks traditionally lend more to smaller companies than large banks do. De novo banks also have fewer overheads, which is music to the ears of SMEs who, as is clear from their rate of survival in the first five years, are less equipped to navigate complex administrative functions and don’t have the capital to cover lending overheads.

Due to the inherent precariousness of SMEs – and their greater propensity for risk-taking – they have often been earlier adopters of new technologies than larger, more conservative businesses.

This is especially the case for those operating solely online, and who are required to make multiple overseas payment transfers.

Traditionally, the cost of processing these fees would have been a major obstacle in the way of steady growth. Yet SMEs can now shop around for a range of

payment service providers who facilitate cross-border transfers in various currencies. This both eases a highly onerous process for small businesses, reduces the overheads that need to go into processing transactions, and quickens the speed at which payments can be made. W hile payment providers generally come with strong tools for market analytics that makes their integration more appealing for SMEs, it is the final point – processing speed – that is perhaps their greatest appeal. It marks a major shift from days of old, when the time taken to clear a cheque, for example – days, rather than hours – incurred cumulatively significant costs for small, young businesses without the reserve capital that large businesses had to cover this.

But with online payment service providers becoming a go-to for many SMEs, the risk of security breaches grows. Hackers will target the area of least resistance – those payment systems that lack robust defensive walls and can therefore be breached. It is in particularly important for SMEs, who may struggle with the financial fallout of any major breach, to do proper due diligence on their PSP, and ensure they are clear on what personal identifiable information (PII) is being requested

of customers, given both the financial and reputational damage that would be incurred in the event of a hack.

Additional progress for is being made in the field of late payments – no small issue for SMEs. Research has found that two-fifths of SMEs in the UK are affected by late payments, and of these, more than half said it was impacting on their cash flow. The problem affects the growth of SMEs and their ability to plan and to invest, and has prompted the UK government to move responsibility for the voluntary Prompt Payment Code to the Small Business Commissioner’s Office. It has been granted an extension of powers to tackle the problem – the ability to issue fines to big businesses who are late on their payments to SMEs, and the enforcement of payment plans when they fail to come up with the goods.

The majority of large businesses may well be good at ensuring payments are made on time, but too many don’t, and if the Small Business Commissioner’s Office is tasked with one overarching mission, it is this: break the culture of late payments, and contribute to an environment in which SMEs – those powerful, yet often fragile, e n g i n e s of g r ow t h – c a n prosper.

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How compliance makes businesses safer, healthier and stronger P

ROTECTING AND improving the wellbeing of employees, customers and the environment are among the top priorities for all responsible businesses.

They’re not only moral and legal duties but provide the foundations for commercial success. Businesses that can proactively demonstrate credentials stand apart from the rest, enabling them to win more work without competing on price.

The need for sustainable and ethical supply chains has grown significantly over the past five years. To work with a progressively minded customer, a business needs to be prepared to demonstrate its credentials in core compliance areas.

Similarly, employees are more stringent about the organisations they choose to work for. Therefore, building a progressive business that cares about its staff’s physical and mental wellbeing is critical.

It’s no longer about box-ticking.

Properly embraced, compliance can help unlock an organisation’s true potential, in a way which needn’t be daunting, distracting or expensive.

Effective risk management as a commercial driver Every business faces risk, and while it can’t always be eliminated completely, effective management will help mitigate the threat.

As more SMEs become increasingly active within the supply chain, the need to demonstrate compliance is key to promoting employee wel fa re a nd d r iv i ng new business.

The risk management cycle demonstrates the key aspects that need to be considered. This critical process should start with a gap analysis, identify mitigation tactics and corrective action, and ensure ongoing monitoring and reporting.

Providing external and internal evidence of a risk management culture in the final stage will deliver major benefits to a business, such as competitive advantages, better employee engagement, and proof that the organisation is fit to supply.

Solutions that should be considered include…

• I ntroducing a management framework providing the structure needed to manage risk effectively • Achieving accreditation in areas such as quality, environmental or health and safety to improve business practices • Using technology and software to drive efficiencies, deliver accurate reporting and improve performance visibility • Managing staff efficiently and avoiding common employee law pitfalls Risk management should be a core part of the business process, protecting it for the future by assisting decision making to avoid risk. It also helps to improve efficiency, build a positive reputation, and save time and money.

The importance of health and safety compliance Employers must create an environment where staff feel safe. By competently managing compliance, they can greatly reduce the risk of a health and safety incident.

The 2017/18 Health and Safety Executive (HSE) figures revealed that 30.7 million working days were lost due to work-related ill health. While it’s important that companies look to contribute to a reduction in this figure, the cost and time implications for smaller businesses often deter employers from implementing effective health and safety strategies that go beyond basic compliance. However, a lack of proactive action can result in significant fines, lost productivity and even prosecutions and prison time.

Managing risk in cyber-space The scale of the UK’s cyber-security challenge is shocking. A 2018 government report found that more than 40 per cent of businesses experienced a cyber-attack in 2017, rising to 70 per cent for larger organisations.

Alcumus information security sector manager Tom Martin-Ball explains the importance of going beyond compliance when facing cyber-threats. “Thinking solely about technology limits your potential range of solutions – the greatest risks are the ones you don’t think about,” he says. “Thorough training and awareness can be as important as technology, and a combination of the two can prove instrumental to a business’s success.”

Responsibilities to people Implementing all necessary HR policies and procedures to protect a business is vital. Claims can cause reputational damage, and place serious strain on the bottom line.

In 2016/17 the average unfair dismissal award cost £16,000, with discrimination awards costing around £25,000. Obtaining bestpractice employment advice in people management issues, especially if there is the likelihood of dismissal, is strongly recommended. Legal expenses insurance (LEI) is also invaluable when the unexpected happens.

Going beyond compliance SMEs account for more than 99 per cent of all UK business and

“It’s no longer about box-ticking.

Properly embraced, compliance can help unlock an organisation’s true potential, in a way which needn’t be daunting, distracting or expensive” – Alyn Franklin, CEO, Alcumus

employ more than 13 million people. Although the importance of risk management is becoming more recognised, some still find it a challenge.

Concerns include health and safety claims, technology failures, supply chain management and global warming, all of which affect sustainability.

There are notable barriers such as time, cash-flow and lack of skills or resources. Yet, most overlook the potential risks of not being compliant, such as loss of reputation, loss of revenue or fines (in 2018, an average fine for health and safety failures was £147,000), technology or security failures, or even business closure.

It’s important to identify an industry expert that understands the challenges SMEs face. A specialist offers a range of compliance knowledge that they would simply not be able to employ in-house.

By demonstrating compliance through a recognised provider, it is possible to illustrate the benefits of operating beyond compliance – the commercial advantages, increase in employee wellbeing and improvements to operational processes that drive efficiency.

Solutions Alcumus delivers affordable and easily adoptable solutions, helping SMEs meet compliance obligations without distracting from core tasks.

With more than 20 years’ experience and almost 40,000 clients, Alcumus has the tools to protect employees, meet demands, drive efficiency and sustainability, and provide a platform for growth.

This is underpinned by software, allowing customers to access the expertise and experience of our technical experts. It also minimises the administration burden as data capture and reporting are simplified and focused on the frontline user.

Whether it’s proving credentials to be a great supplier by becoming Alcumus SafeContractor accredited or ISO-certified via Alcumus ISOQAR, mitigating risk related to the use of chemicals via Alcumus Sypol, or developing effective health and safety and HR management frameworks with Alcumus PSM, there is a solution fit for all organisations.

INDUSTRY VIEW

For further information or to speak to us about your challenges, visit www.alcumusgroup.com/ sme-solution

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Power tools to the people: making robotics accessible to everyone

Plug-and-play robotics As mentioned before, robotics has been stagnating for decades. But the industry is now at a stage comparable to the introduction of PCs, smartphones and the internet. Our robot systems can be used by everyone, with no need for specific

Industrial robotics still requires a lot of safety regulation, predominantly the legacy of the metal giants of classical industrial robotics. But you can use our robots with minimised safety guards and in a collaborative way – the specifics depend on the application, the end-effectors, the level of trained personnel and other factors.

However, we are on the verge of dramatic changes. It is just a matter of time when cyber-physical systems – devices that connect the digital with the real world – including robotics, drones and autonomous vehicles will be deployed in huge numbers.

Besides technological hurdles – mainly the visual perception – the biggest challenges will and should be the acceptance of the general population, as well as legal and liability issues. Europe is the technology leader in this field, but we are far behind when it comes to educating the population and setting up clear rules. This could be factor which will lose us the next battle in technology and become purely a bystander, as happened in the smart device era.

“Combining highly qualified factory workers with low-cost automation enables them to compete with low-income manual labour”

Is RaaS the most effective approach to SME robotics adoption?

© TQ-Systems

O

VER THE past decades there’s been a dramatic reduction in manufacturing across Europe, as the western European cost structure in particular struggles to compete with international low-income labour. Companies must outsource their manufacturing to low-income countries or shut down entirely.

Robotics, however, makes it possible to relieve people of unnecessary labour, increase productivity and drive revenue.

Combining highly qualified factory workers with low-cost automation enables them to compete with low-income manual labour. New generation robotics can handle short production cycles, and those that require lots of minor adjustments.

But even today, robotics technology remains a luxury for all but the largest multinationals, and confined to a narrow range of industries. The most obvious and prevalent example is the automotive industry, although even here robotics has seen little development for decades. Indeed, robotics technology has seen little improvement overall, focusing on solutions that are remote from humans, costly, specialised and inflexible. These systems require not only six-figure investments, but also many weeks to be set up and programmed. Demanding extensive knowledge in the field, they allow for little flexibility in adjusting and reprog ra m m i ng task s, ma k i ng t he return-on-investment very high.

Franka Emika’s vision is to make robotics accessible to everyone. Our robotic assistants are affordable, as usable as a smartphone, and are designed for direct human-robot interaction while equipped with the highest capabilities. Our users – from highly skilled robotics professionals to factory workers in firms of all sizes – are benefiting from this easy-to-use, flexible, cost-efficient and scalable approach.

Our revolutionary robotic system Panda has been specially designed to be deployed within the 3C (computer, communication and consumer electronics) industry.

However, it is capable of automating various tasks within any given sector, relieving factory workers of tiresome, repetitive and potentially even dangerous tasks, therefore relocating human resources towards more engaging and impactful assignments.

know-how or integration methods. The future is already here. The plug-and-play – or “out of the box” – approach is at the core of Franka Emika’s methodology and design.

Panda offers the easiest and fastest set-up – in under 15 minutes it easily integrates into any environment. It can be operated through any PC or mobile device and can be used by laymen or experts alike. Panda is the first system that can be operated via smartphone-like apps, with an engaging, intuitive dialogue menu. It can learn new tasks in minutes by direct interaction, such as hand-guiding. Apps and tasks can be easily purchased and/or shared through our novel digital robotics platform Franka World. Users can reuse or deploy taught tasks on multiple robots to reduce costs and increase profit significantly. It is a unique, powerful tool, and the first of its kind.

Panda offers human-like agility thanks to a full seven axes of movement, and has an inherent, even adaptive compliance with novel sensor technology, algorithms and machine learning.

Panda is not only revolutionary, it’s also affordable. At less than €11,000 it is considerably less expensive than other players on the market, and can be equipped with apps and services through Franka World.

Are robots truly compatible with human employees?

Our team was among the researchers who invented physical human-robot interaction more than a decade ago. Most robots available on the market are preprogrammed positioning machines. We, however, see robots as power tools that serve humans and make their lives easier. More than 15 years of research made this concept possible, but as with any technological revolution, it takes time for it to be fully embraced by the market and the general population.

Panda represents a new generation of sensitive and versatile power tools with a unique sense of touch that supports humans in various tasks. It has shifted the perspective on robots from being dangerous job-killers to interactive devices comparable to smartphones.

SMEs seek the simplest available solutions that allow for maximum flexibility and scalability. Most people are familiar with using technology, especially software, as a service (SaaS), and therefore RaaS definitely has great potential.

However, one must differentiate between the entire robot system as a service, which requires a certain logistical effort, and using robot functionalities as a service.

For the first time, the latter is possible with Panda’s industrial-suited robot system.

Franka World, the revolutionary platform we launched at this year’s Hannover Messe, enables community interaction between researchers, partners, customers, developers, suppliers and even robots themselves, to push the frontiers of Industry 4.0. Besides communication, everyone is able to easily gain integrated access to products, services and management of entire robot fleets, independent of their physical location.

Consequently, RaaS is an inherent part of our business model, and it will follow a similar success story as, for example, when expensive on-premises solutions were supplanted by enterprise resource planning (ERP) systems. We strive for a world where everyone can use a robot, and we can reach that by connecting the world.

INDUSTRY VIEW

@frankaemika www.franka.de www.linkedin.com/company/frankaemika

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Ask the expert…

What’s the biggest mistake SMEs can make and how can it be avoided?

How can you get out of the banking loop?

ISREGARDING CUSTOMERS. There’s a fine balance between delighting customers and turning a profit, especially for small businesses.

Caring for your customers will in turn provide you with an opportunity to learn from them and earn the right to ask more of them – word-of-mouth marketing is both powerful and cost effective.

Take time to understand how the process of dealing with your business has felt for your customers, and don’t be afraid to ask questions you might not like the answers to. The insight might lead you down an exciting, new avenue that leads to greater success.

If you don’t look after your customers, someone else will! Recognising loyalty is likely to keep your customers coming back for more and earn you some brownie points, meaning that should you make a mistake, you will almost certainly be forgiven.

Lastly, don’t ignore complaints!

They’re not personal and they provide a great opportunity to turn an unhappy customer into one of your biggest fans.

INDUSTRY VIEW

www.totalgp.com

What challenges lie ahead for businesses after crypto-regulations?

Anders la Cour, co-founder and CEO, Banking Circle

Peter McLeod, director, small business Total Gas & Power

D

Hot-button questions answered by industry thought leaders

F

OR MANY start-ups, getting the business up and running is easy.

All it takes is a great idea, the knowledge that there’s a market, and the imagination and bravery to kick it off.

However, what does keep new and small business owners up at night is banking. With no two SMEs alike, banks – be they incumbent or challenger – are not always able to provide SMEs with the flexible, fast-paced banking solutions they need.

Depending on the size, structure, ownership and history of a business, and the bank they speak to, the banking options available to SMEs vary dramatically, yet rarely suit the business imperative. Application and set-up takes too long, costs can be out of reach, credit repayments are inflexible.

Bringing about real change and better financial inclusion for SMEs requires market participants to work together and develop joint solutions, collaborating to build bridges between individual innovations already in the market. And as with any ecosystem, it must be perfectly balanced in order to function effectively.

Only with all types of providers working together in collaboration, not competition, will the banking ecosystem be able to bring financial inclusion to its peak.

How can the future workplace allow for greater collaboration?

What will be the biggest disruption in the payments sector over the next year?

Ralph Payne, CFO, Copper

Adrienne Gormley, vice president of global customer experience and head of EMEA, Dropbox

Kevin Salaman, head of retail, Elavon

F

W

T

OLLOWING ON from the FCA’s first policy statement on cryptoassets, the payments industry may well be in for a shake-up, with some crypto-businesses potentially falling under the FCA’s regulatory supervision.

This is great news for crypto consumers, but for SMEs it adds the regulatory hurdle of acquiring an e-money license and meeting stringent regulatory standards if they wish to process transactions that the FCA deems fall into the e-money or payment space.

For the typical money service businesses, the increasing clarity on crypto-regulation will only lead to more participants, giving rise to substantial competition to traditional payment methods. In turn, these traditional businesses will be under pressure to match the cheaper, quicker and more efficient transfer services that can be met by crypto.

But there is still a long way to go. And while Facebook’s Libra Association may be doing some of the heavy lifting with regulators on behalf of SMEs, current uncertainty and lack of definitive guidance will continue to be a barrier to entry.

ITH TEAMS increasingly working across different geographies and time zones, companies need an intelligent digital working environment that effortlessly connects platforms and conversations.

Bringing together tools and applications into one place makes it easier for people to connect, collaborate and focus. And by making everything accessible, employees no longer have to waste time bouncing back and forth between different interfaces and file types, or searching for documents in silos. Instead, everything they need is at their fingertips.

Centralisation also enables greater engagement, as people benefit from shared context when collaborating on a specific file or project in real time.

With employees currently switching bet ween up to 35 job-critical applications nearly once a minute, this smarter way of working cuts out the distraction and helps employees focus on the work that really matters.

INDUSTRY VIEW

@DropboxBusiness www.dropbox.com/business

INDUSTRY VIEW

@copperhq uk.copper.com

HE DIGITAL era has spawned a rapid evolution in the payments space, one that has been driven by both consumer demand and a government mandate to go cashless.

By 2026, physical cash could represent just one in five transactions.

Today, one in four UK phone users regularly use payment apps. And while penetration is more significant in younger generations, payments apps aren’t exclusively for millennials and Gen Z. Worldwide, it’s estimated that the transaction value of mobile payment apps will reach nearly $14 trillion by 2020, although this is somewhat weighted by rapid adoption in China.

Banks and technologists have been only too happy to embrace digital currency: cashless is cheaper to run, quicker, more secure, trackable, and more accountable. Businesses can easily access these same advantages. Despite scary headlines, digital currency is in fact more secure than cash. It is certainly cheaper to run and transactions can be processed in a quicker timeframe.

For now, widespread adoption of payment technologies is awaiting its big bang moment. But with 5 per cent penetration in just a handful of years, alternative payments can and will continue to grow at speed.

INDUSTRY VIEW

For more information on how Elavon can help your business, visit www. elavon.co.uk

INDUSTRY VIEW

www.bankingcircle.com

There’s hidden treasure in payments…

Despite the pressure to deliver increased value, payments remain an undiscovered treasure trove

O

NE OF the things that annoys me about “digital disruption” is that anyone still thinks its news. It’s like telling a sailor embarking on a journey that there will be weather.

The sailor knows this. However, they are interested in technology to help navigate impending storms.

Similarly, the announcement of digital disruption isn’t helpful, but tips to navigate it are.

As we weave our way through this current storm, it’s clear that experienced navigators will not sail through the weather first. New sailors might approach the seas differently, fearlessly using technologies like hydrofoils to fly across the bumpy waters.

In the same way, tomorrow’s CEOs are challenging their business models, embracing ideas

from developers, customers and the supply chain, ripping things up to reassemble them in new ways over and over again.

Despite so much energy being spent on finding new ways to extract value, there are still passages that remain uncharted: payments. Today’s CEOs still see payments as a necessary evil, an annoying cost of doing business. But what they don’t realise is that lost in layers of old legacy technology is a treasure trove of value for any organisation.

Payments ecosystems are goldmines. The problem is no one knows where to look, and how to mine them. The right payment partner can help with this, delivering greater business transparency and intelligence, saving time, costs and reducing friction. A better payments solution

results in a seamless user experience, increased conversions, improved collection rates, automated reconciliation and proactive dispute management – helping organisations unlock exponential value previously lost by legacy technologies.

The pressure to deliver increased value isn’t going away, and digital disruption will continue to whip up turbulent waters. The skipper that can turn stormy conditions into a competitive advantage is the one that will win. Payments offers the key. Bon voyage!

INDUSTRY VIEW

Vaughan Owen is CMO of Acquired.com @acquiredlive www.acquired.com

October 2019

AN INDEPENDENT REPORT FROM LYONSDOWN, DISTRIBUTED WITH THE DAILY TELEGRAPH

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Late SME payments costing the UK economy £51.5bn per year, says study “An imbalance of power between clients and suppliers has led to a widespread late-payment culture that is damaging UK SMEs” – Robert Gordon, Hitachi UK

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EARLY A third (31 per cent) of British SMEs have struggled because of late payments in the last year, according to a report by Hitachi Capital UK – which are estimated to have cost the UK economy at least £51.5 billion.

More than a third of the country’s 5.6 million small-to-medium enterprises reported losses of at least £10,000 over the last year, the study said – resulting in poor cash flow that in turn affected productivity and growth. Even more worryingly, 12 per cent of respondents said late payments meant they were sometimes unable to pay staff salaries, leaving 1.95 million UK employees out of pocket on payday.

With many smaller businesses already struggling thanks to tight margins and cash flow, the study sheds light on additional unwelcome pressures from late payers. 40 per

cent of business owners had been forced to fill gaps in cash-flow with their own money, for example.

Robert Gordon, CEO of Hitachi Capital UK, said that the figures indicated a wider problem running across the entire supply chain, where larger businesses were abusing their influence, resulting in a drag on the national economy. “An imbalance of power between clients and suppliers, often driven by larger players abusing their position, has led to a widespread late payment culture that is damaging UK SMEs,” he said. “As our research has shown, if we let this go unchecked, huge numbers of businesses will continue to experience cash flow pressures at a time of wider economic uncertainty.

“This has ramifications not only for SMEs, but for entire supply chains and a fair, competitive and supportive business environment is critical for the country’s wider economic success.

It’s imperative that we not only

acknowledge this issue and crack down on late payments, but also take practical steps to ensure businesses are given the required support and penalties are put in place for the worst offenders.”

Other figures in the study indicated that 21 per cent of SMEs were likely to turn down a contract if a client was known to be a bad payer or offer poor terms. Just over a third (34 per cent) said that they felt a customer had abused their position to reduce or delay a payment, and 57 per cent said they spent at least a day a week chasing late payments. Professional services were pinpointed as the worst offenders by 17 per cent of SMEs. Late payment rules as well as revisions to the Prompt Payment Code were introduced by the last government and put on hold, but have now come into force. These are intended to give the Small Business Commissioner greater powers to enforce best practice.