Here are the week’s main news stories in the world of small business and digital payments:
Banks see Open Banking as a challenge as non-cash payments boom
Many banks remain reluctant to embrace Open Banking via data sharing, ecosystem partnerships and open platforms, with multiple incumbents still being cautious of change. According to Capgemini’s World Payments Report 2019, they perceive Open Banking as a potential challenge when it is really a necessity for improved customer experience and will improve retention in the long-run. The report finds that the transaction volume of non-cash payments is growing rapidly, particularly in developing markets within Asia (32 per cent growth) and Central Europe, Middle East and Africa (19 per cent growth). It is projected to top one trillion non-cash transactions globally by 2022, which equates to a compounded annual growth rate of 14 per cent.
Growth in SMEs looking for finance
Around 5.7 million SMEs are currently searching for finance, according to the latest BVA BDRC’s SME Finance Monitor. Around half of these businesses are looking for growth finance, leaving over 100,000 SMEs looking to access capital to facilitate growth. The majority (80 per cent) of SMEs reported profitability over the last 12 months, with 42 per cent reporting that they used external finance. In addition, half of SMEs plan on growing their business over the next 12 months, compared to just 43 per cent before the 2016 EU referendum, with increasing numbers using external finance to fulfil their business ambitions.
Fintechs to grab $280 billion in payments revenues by 2025
Banks are set to miss out on as much as $280 billion in revenue from their payments operations by 2025, as new start-ups muscle in and more of the business of sending money to individuals and companies becomes instant and free, according to a report form professional services firm Accenture. The global payments business is dominated by banks and this year was worth around $1.5 trillion, according to the report. That is expected to grow to $2 trillion globally by 2025 but banks are likely to lose out on $280 billion, or 15 per cent of their global payments revenues, Accenture estimates.
More than half of SMEs unable to fund business ambitions
More than half (52 per cent) of UK SME owners have business ambitions they feel they are unable to fund, alternative finance provider Nucleus Commercial Finance has revealed. Business owners in the capital are struggling the most to match their ambitions, with 61 per cent of London SMEs unable to access funds. Chirag Shah, chief executive, Nucleus Commercial Finance said, it was clear that funding challenges remained that “could see a significant impact on the UK’s economy if SMEs are held back”.
Mastercard partnership aimed at developing blockchain cross-border payments
Mastercard has partnered with R3, the inventor of DLT (Distributed Ledger Technology) to create a platform for frictionless international payments based on blockchain. Mastercard blockchain cross-border payments would also help banks and various financing institutions to provide cost-effective services. Mastercard researching blockchain technology in order to allow banks to provide quicker and more efficient payment services to their clients.
UK SMEs remain confident despite Brexit deadlock
UK SMEs feel broadly confident about their growth prospects, despite the looming challenges of Brexit, according to a new report by payment solution provider Elavon Europe. The study of 865 SMEs across 17 UK cities found that despite the economic uncertainty, 60 per cent of UK SMEs feel positive about growth prospects, with 68 per cent believing there are more opportunities now than 10 years ago. Apart from Brexit, which was the biggest concern voiced by SMEs (51 per cent), the other main challenges include cash flow (39 per cent) and customer retention (24 per cent).
Oxfam brings blockchain-based payments to disaster zones
A new Oxfam-led pilot has opened the door for blockchain and digital payments technology to make their way into disaster zones, in a project the federal government funded with $300,000. The grants, made through the Department of Foreign Affairs and Trade, are aimed at helping the charity and its corporate partner Sempo roll out the pilot program across disaster-torn areas of Vanuatu. Oxfam Pacific Cash and Livelihood head Sandra Hart said the programme, which targeted communities on Efate Island, was designed to reduce the time it takes for financial aid to reach these areas.