How Banking & Fintech Innovation Has Accelerated in 2019
We’re in the midst of a business banking revolution. In the past, legacy structures and slow banking processes were commonplace, with innovation and new technologies from the retail banking world rarely being available for businesses.
But according to James Butland, VP European Banking at international payments platform Airwallex, this is changing.
Innovative solutions and more customer centric business banking platforms are on the rise, and, as a result, SMEs are moving away from their current banks in their droves. This is highlighted by the UK’s Current Account Switch Service reporting that there were 17,687 business account switches using the service during Q2 of this year, compared to just 8,000 switches during the same period last year.
Clearly, SMEs are hungry for new services that help them to manage their money more effectively, and with Brexit and a fluctuating currency potentially causing issues, it couldn’t come sooner.
World changing SME banking
The need for services that better meet the demands of businesses has seen payment fintechs such as Accelerate, Square and Monzo partner with the likes of Mastercard, eBay and Visa to provide more up to date technology in the B2B banking world. These innovations are aimed at speeding up payments and helping SMEs to compete in an increasingly globalised and competitive economy.
Innovation within international payments has also seen similar developments. This is largely due to the opaque nature of current FX practices. A new paper from the European Central Bank recently revealed that banks across Europe have overcharged SMEs for foreign exchange services, and have earned hundreds of millions of euros each year, at the expense of their small corporate customers. These SMEs have often been presented with misleading exchange rates and secret charges by banks, while unfairly being offered lower exchange rates compared to larger businesses at the same time.
This is a big issue. Particularly as 232,000 of UK SMEs exported to overseas markets last year, representing 10% of the country’s small and medium-sized businesses. It’s why companies such as Airwallex, through our Global Accounts and FX capability, is helping SMEs to break through murky FX practices, and access exchange rates that have been typically only available to large corporates. Customers can be shown correct and clear rates and can act as a local in new markets. These new platforms, services, and in some cases new banking entities, are removing the complexities of exporting overseas and therefore allowing SMEs to focus more on growing their business.
Partnership benefits for SMEs
SMEs desperately need these developments because previous legacy payments and slow banking processes are not only significantly slowing down the speed at which they can operate at but are also ultimately limiting their growth. The transparency available now to help SMEs understand FX rates and expenses alongside more innovation within payments and banking solutions will prove vital for smaller businesses going forward. This will provide them with confidence over their margins and allow them to grow through enabling them to provide far swifter payments, both nationally and internationally.