The SME technology revolution | video

The UK is home to 5.4m micro SMEs that have fewer than nine employees, according to the House of Commons library. They are lean businesses, operating with an all hands to the pump approach. A luxury once reserved for big business, technology vendors are beginning to offer affordable solutions to automate key business functions for the SMEs, freeing up staff to grow the business and delight their customers. Employing 33% of the UK, this fledgling SME technology ecosystem could prompt an SME revolution.

Watch the video to find out the view on the frontline.

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What are the Barriers to a Cashless UK?

David Orme, Senior Vice President at IDEX Biometrics

In many ways, the UK is progressing towards becoming a cashless society. Despite this, there is a range of barriers threatening to undermine the UK’s ability to fully embrace this transition. From a lack of trust in new technology to a sentimental connection to existing payment methods, these barriers must be both identified and overcome if the UK is to operate in the modern climate.

The latest Access to Cash review revealed debit cards are now the most popular payment method in the country. But the decline of cash payments is not good news for all of us. Around 8,000,000 UK adults — 17% of the population — would struggle to cope in a cashless society. Many of these are from vulnerable groups: the poor, those with physical and/or mental health challenges and people without bank accounts are all disproportionately likely to rely on cash.

While the UK as a whole has been rated among the nations most ready to go cashless, some residents are clearly readier than others.

As things stand, a cashless UK would exclude a large number of people.

So, what are the greatest barriers to the UK’s cashless society and how can they best be tackled?

Who relies on cash?

With almost 500 UK cash machines being removed from service each month, cash is getting harder to find. Disadvantaged groups are more likely to rely on cash and some, such as those who do not have a bank account, have little choice but to use cash for everything. In 2017, people in the UK made more than 13 billion cash payments. The choice seems clear: either ensure the continued availability of cash or make it easy for all members of society to go cashless.

Around 8,000,000 UK adults — 17% of the population — would struggle to cope in a cashless society.

Other countries have tackled this. For instance, Sweden has positioned itself as the front-runner to becoming a truly cashless society. In fact, four out of five purchases in Sweden are made electronically, and Sweden’s central bank, Riksbanken, estimates that between 2012 and 2020, cash in circulation will have declined by 20–50 per cent. What can the UK learn from Sweden? Although Sweden experienced similar reservations to the notion of a transformation into a fully cashless nation from certain groups that are dependent on traditional currency, Riksbanken also emphasised that the answer lies in making sure that cash services are still provided. This would suggest that the ideal payment balance lies in offering people freedom, even if physical currency becomes rarer.

Furthermore, the Indian government has pushed the cashless agenda to tackle corruption and crime, and to draw in millions who currently live at the margins of society. One element of this is Aadhaar, a digital identity/authentication that relies on fingerprint biometrics. When linked with bank accounts or other methods, Aadhaar lets users authenticate payments, regardless of their literacy, income or access to formal banking.

A similar use of fingerprint biometric payment smart cards could overcome several of the problems we see in the UK. For example the fool-proof authentication built into biometric pre-paid cards could help those currently unbanked to build a credit rating, and gain access to products and services previously beyond reach.

Facilitating choice

When asked why they use cash at all, UK residents give a range of answers. These include convenience, trust and choice issues. People like having a choice of payment and for that reason (as well as several others) the complete demise of all physical currency in the UK is still several years away. Even those who are happy to use cashless payments like to have cash as a back-up, while those who generally favour other forms of digital payment (PayPal, mobile wallets, etc.) have cards for the same reason.

Ensuring trust in card payments is very important for consumers, banks and merchants alike. As such, where cash payments are currently preferred for convenience, the obvious response is to make card payments as easy and trusted as possible.

Where trust is a problem, this is often because consumers don’t trust banks, the internet or the infrastructure needed to make cashless payments work. This has a certain situational irony, because cashless payments are actually far more traceable than cash. Yet some consumers remain wary: they need to be reassured that card payments are secure.

Here, biometrics are useful once more. While a signature can be forged and an online account hacked, a fingerprint is virtually impossible to replicate. What is more, consumers are used to seeing biometrics used in places where security is paramount, such as airports; they trust biometrics as a gold standard.

Cards with built-in biometric authentication help customers to overcome trust issues around digital payment. They are also, therefore, likely to help financial organisations who wish to draw in the sceptical consumer by reassuring them.

People like having a choice of payment and for that reason (as well as several others) the complete demise of all physical currency in the UK is still several years away.

How soon?

The Access to Cash review concludes that cash is unlikely to disappear from the UK completely, and that there are important reasons to keep it in circulation. However, it seems reasonable, given recent trends, to believe the use of cash will continue to fall and the use of alternatives, specifically payment cards, will rise.

It seems likely that the UK will ultimately become mostly, as opposed to completely, cashless, but preparation is key and the transition must be well supported. Rural areas must be sure they are able to access electronic money transactions, for example.

Fingerprint biometric smart cards are safer and more accessible, allowing even those without formal banking identities to make cashless payments securely and reassuring the most nervous banking clients. After all, many UK schools already give pupils (who are of course, largely ‘unbanked’) biometric cards with which to pay for their school lunches — it looks as though that’s a lesson we could all do with learning.

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Vince Cable Criticises “Students Being Exploited as Cheap Labour During Internships”

Following a report by TheCityUK and Santander decrying the dearth of graduate talent entering the financial services sector, Vince Cable has highlighted the plight many student trainees face when applying for placements with multi-national companies.

Cable has spoken of the financial hardship wrought on students as multi-nationals take months to pay expenses following job placement assessments. Typical of those affected is Flo Instone, a Newnham College, Cambridge undergraduate. Following an invitation to attend a distant Vodafone assessment centre, which necessitated both a train journey and an overnight stay, Flo submitted her expenses claim.

She says, “On January 11th 2019, I travelled to Vodafone HQ in Newbury for an assessment centre. I did the same for other multinationals. In all cases, due to the distance from Cambridge, I had to book trains and overnight stays. I was told my expenses would be reimbursed shortly after completion of the assessment centre. After countless emails to Vodafone, where I was forwarded to different people and departments, I was finally reimbursed on April 20th – over three months after attending the assessment centre. This wasted much precious time, as I am about to sit my finals. “

Cable has spoken of the financial hardship wrought on students as multi-nationals take months to pay expenses following job placement assessments.

Commenting on the matter, Vince Cable, MP for Twickenham (Flo’s home town) said, “There is a recent history of students being exploited as cheap labour during internships. And the behaviour of assessment centres run by big corporates such as Vodafone rather confirms the impression that they do not treat young people as a potentially valuable human resource – as they should – but as an easily exploitable group. Otherwise, they would treat young people with more respect and make sure their expenses are fully and promptly paid.”

Students frequently have to undertake prolonged interviews and assessment exercises in order to assess their suitability for graduate schemes, often held at centres some distance from their university. This can necessitate travel as well as the need for an overnight stay. With student debt constantly rising, expenses for travel and overnight stays need to be paid back promptly, as many students struggle to live on an already challenging budget.

Looking ahead, big businesses require their workforces to be digitally aware, flexible and diverse in order to flourish. Whilst the UK remains at the forefront of the fintech ecosystem – sporting remarkable growth and promise – it will need to take better care of its most precious resource if it wants to stay there.

Working Lunch: Our Talents Talk Fintech Innovation at FinovateSpring

From walking meetings to working lunches, we know that fintech folks like to stay busy. And with so much to offer during FinovateSpring’s Content Day on Friday, May 10, we thought we’d take advantage of the noon lunch break to bring you even more great analysis and insight from some of fintech’s sharpest observers.

Here’s a peek at our lunch time line up, including one expert briefing panel discussion and a whole slew of special interest, hosted discussions held under Chatham House Rules to promote a free and open conversation.

  • Addressing Financial Wellness & Financial Inclusion. An expert briefing moderated by Theodora Lau, Founder, Unconventional Ventures. Featuring:
    • Monica Brand Engel, Founder, Quona
    • Ashraf Hassan, Global Head of Strategic Partnerships, Google Play
    • Stoyan Kenderov, Head of Product & Design, Lending Club
    • Brad Leimer, Co-founder, Unconventional Ventures
    • Jennifer McHugh, Director of Public Affairs & Financial Education, Royal Credit Union

Here are our special interest discussion tables held under Chatham House Rules:

  • How Incumbents Can Successfully Collaborate with Fintechs to Accelerate Change with John Stecher, Chief Innovation Officer, Barclays Bank
  • The Democratization of Alternative Investments with Ronak Pakzad, Founder, GoodWealth
  • Quantum Computing – The Wave of the Future? with Aleksandr Oysgelt, Director, Technology and Innovation, Deutsche Bank
  • Challenges in the Insurance Industry & How Insurtech Could Solve Them with Quetin Coolen, Co-founder and CEO, Waffle
  • How Challenger Banks are Creating a Seamless Digital Experience with Tyler McIntyre, Founder, Bank Novo
  • How Community Banks Can Harness Fintech with Jill Castilla, President and CEO, Citizens Bank of Edmond
  • Addressing the Security Challenges Facing Financial Institutions with Sean Sposito, Security Analyst, Javelin Strategy

Remember our Content Day on Friday, May 10, will also feature four afternoon content streams dedicated to Community Banking, Digital Payments, Digital Banking, and Digital Lending.

Tickets to FinovateSpring are still available, so visit our registration page today and reserve your spot. We’ll see you in San Francisco!

Digital transformation for insurance or simply competitive advantage?

Just when I thought the Elephant that is insurance was fully accepted as an aggregation of many participants’ perspectives, along comes Digital Innovation, Digitization, and Data Culture discussions as another example of many parts making the whole.  What makes effective digital innovation/integration for an industry or firm, is digitization the root of InsurTech, who in the firm should be taking the lead on evolving the firm into a digital world, all questions that crossed my media feed this week.  On one day!  And a big question- does digital transformation stand on its own as a business initiative, or is it simply one other activity that comprises a firm’s efforts to maintain or grow competitive advantage?

As for the academic approach to digital transformation, I’ll consider two authors of articles that make good points and have solid basis from which to speak. I contend that in some ways the authors are also subject to the potential narrow path of each of the vision-challenged men in the fable- a conceptual grasp primarily of what is immediate and not in consideration of whole issue.  Through whose eyes are the issues being considered?  Customers’? Staff? Leadership? The public?

While there as many definitions of digital transformation as there are discussions about it, this example is a pretty solid one:

“we define digital transformation as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers. Beyond that, it’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure.”  The Enterprisers Project 

(Consider though, that even this description does not embrace transformation from the customer-backwards perspective.)

Two authors who have a good grasp on digital transformation and its effects/integration on/in business provide us some bullet points:  Jim Marous, global authority on marketing and strategy for retail banks and credit unions in his article, “Becoming a ‘Digital Bank’ Requires More Than Technology”, and Claudio Fuentes, Product Manager at Pypestream, as noted in “5 requirements for building a strong data culture”

Areas or components that the authors suggest are needed or are present for effective digital transformation within an organization:

Digital Transformation Pathways

Good summaries, good advice, but are the bullet points actionable across the entire spectrum of insurance or banking businesses?  What if the subject firm is brand new, tech-based, with no analog process ‘baggage’ to wrestle?  The reality of digital transformation is that businesses need to consider the principle as part of being competitive within their respective industries, and in being responsive to what their customers need or expect.  Transformation for the sake of being fashionable might be considered a fool’s chase.

Consider the challenges for the Nigerian insurance industry- very low insurance product penetration, and lower than average acceptance among the population regarding the need/purpose of insurance products.  One hundred million potential insurance consumers, urban and extremely rural.  Does digital transformation make as much sense for that insurance market, when the delivery to existing customers is meeting their needs, and expanding penetration to the balance of the population can be effected through smart devices (much higher penetration of smart devices than insurance) and InsurTech players?  Are digital efforts potentially transformative to existing processes if the customers have no expectations of improvement?  Would it be focus and funds not well spent?  And if an industry is being built from ground up, there is little transformation to be had as any efforts are greenfield.  The point- it’s competitive advantage and customer responsiveness that should drive transformation or not.

(if you want to read a good summary of Nigeria’s FinTech/InsurTech activity and challenges, see Segun Adeyemi,  Where are the Digital Insurance Platforms in Nigeria? )

 A recent article by Richard Sachar, titled Who is Responsible for Leading Digital Transformation Within Insurance Companies  prompted a discussion with one of my favorite InsurTech connections, Thomas Verduzco-Weisel, wherein I opined:

“Better question, one might say- who is responsible for maintaining (or gaining) competitive advantage for a respective insurance organization? Digital transformation has been continuous since the advent of electronic data processing; it simply has a rallying cry now called ‘InsurTech’.   Customers may not know how (what methods) they want their insurance products delivered, but they do know what is important to them.  Keeping that pulse drives how the firm needs to maintain its edge, and then applying process, admin, or tech innovation to keep that edge will direct the firm in who/how/when/and with whom any transformation is needed. What if a firm’s culture, processes, staff, and delivery are driving growth and profitability now, should there be a transformation just to be fashionable?  Good business practices should drive any change, and by extension strategy at the senior level, tactics at operational levels, and all levels keeping track of how customers and staff are maintaining comfort with operations. “

(However, if there’s an urge to be fashionable, innovate/transform from the customer backwards.)

Digital transformation is as fashionable a concept as is InsurTech, and needs to be approached within business context.  There is no question that if transformation is undertaken prudent businesses should follow a framework as suggested by Messrs. Marous and Fuentes.  But before jumping into the fashionable approach, is any transformation being undertaken as a standalone concept, or as part of a firm’s competitive or growth strategy? Have to consider the entire beast, not just one facet or part. And as my fine colleague who knows of such things, Karl Heinz Passler,  states, Stop Confusing InsurTech With Digitalisation.

Digital transformation makes sense where it makes sense, and when undertaken, it makes sense to consider what all the organization’s stakeholders need.

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Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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Dublin Airport taxis get cashless payment terminals from eComm Merchant Solutions

Irish fintech eComm Merchant Solutions has announced an agreement with the Taxi Alliance of Ireland to equip Dublin taxicabs with new in-car payment terminals.

The agreement will allow passengers to pay with credit cards, including Visa, Mastercard, American Express and digital wallets like Apple Pay and Google Pay, according to Gerry Macken, chairman of the Taxi Alliance said in a company release from eComm Merchant Solutions.

“With this initiative we have brought a one-stop-shop solution to the drivers, providing fast settlement times, competitive rates and all supported by our local call centre in Ireland,” Dominic Higgins, commercial director at eComm Merchant Solutions, said in the release.

Higgins said he expects that passengers will be able to taxi without cash at other locations across the country.

Topics: Contactless / NFC, In-App Payments, Mobile/Digital Wallet, POS, Technology Providers

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Hertz upgrades mobile app with enhanced loyalty, expense tracking

Hertz has announced the release of an upgraded mobile app that includes several enhancements to help customers book their rental cars faster, track loyalty rewards and manage expenses.

“When redesigning the Hertz app, we listened to our customers and what they wanted most,” Jayesh Patel, brand senior vice president at Hertz, said in the announcement. “Our customers told us they wanted faster reservations, better visibility to their loyalty program rewards and easy access to their rental history and receipts.”

  • The new features include the following:
  • Customers can log in quickly using facial recognition or Touch ID, access previous rental searches and current reservations, and make changes to future reservations.
  • Hertz Gold Plus Rewards members can see member status, rewards number and points in a single viewing, as well as pay for bookings using rewards points and exchange points faster. Members can make profile changes, change payment information and access rental information and receipts.
  • Customers can get customer service or emergency roadside service through the app, find nearby Hertz locations and find available parking spaces using SpotHero.

Topics: In-App Payments, Loyalty Programs, Mobile Apps

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Juniper forecasts pure digital companies will process $14T in B2B payments by 2023

Juniper Research has issued a new report showing that B2B transactions processed by pure-play digital operators will reach $14 trillion by the year 2023, an increase of $6.7 trillion compared with 2018 figures.

The report shows that these new entrant fintechs are providing companies the ability to process these transactions faster and at lower cost than traditional banks, and the more established banking companies are reluctant to make the investment to upgrade their legacy computer systems to handle these transactions.

The report shows that new entrant firms like Modulr or Soldo can enter this business without any legacy computer systems and provide real-time payments technology that integrates with corporate accounting software.

The report also named the top five payment processors:

  1. ACI Universal Payments

  2. FIS

  3. Vocalink/Mastercard

  4. Fiserv

  5. Finastra

Topics: Bill Payment, Mobile Payments, Money Transfer / P2P, Online Purchasing, Transaction Processing, Trends / Statistics

Companies: ACI Worldwide, Vocalink, FIS, Fiserv, Juniper Research, MasterCard

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