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FEBRUARY 2018 ISSUE

UK RETAIL BANKER w www.rfigroup.com t twitter.com/RFiMediaGRB

UK Business Banking Forum SPECIAL FEATURE 14

RFi GROUP INSIGHT

SAVINGS & CURRENT ACC

LENDING

06 Building the relationship:

19

24 First time buyers able to invest

Relationship management & Commercial Banking

TransferWise launches borderless current account

in buy-to-let properties with Landbay


CONTENTS

07 08 19

21 RFi GROUP INSIGHT

SPECIAL FEATURE

SME & COMMERCIAL

06 Building the relationship: Relationship management & Commercial Banking

14 UK Business Banking Forum

21 Banks provide £225m in funding firms affected by Carillion liquidation

INTERVIEW

08 C-suites from the UK Business banking ecosystem discuss an industry on the tipping point of change 02 RFi MEDIA

SAVINGS & CURRENT ACCOUNTS 19 TransferWise launches borderless current account

23 Virgin Money launch SME savings accounts


CONTENTS

24 28

31 LENDING

CARDS & PAYMENTS

FINTECH

24 First time buyers able to invest in buy-to-let properties with Landbay

28 SafeCharge approved by the FCA as a payment processor

31 Monzo to disable prepaid cards this April

26 New retention range by Skipton Building Society

29 Google Pay to replace Android Pay and Google Wallet

33 Curve gets full consumer launch

UK RETAIL BANKER 03


Running a business can be complex. But managing it needn’t be. That’s why Mastercard® has been working hard to understand the day-to-day challenges facing your small business customers. In conjunction with our digital partners we’ve developed a suite of innovative solutions and acceptance tools to help business owners simplify the way they buy, operate and sell; and increase visibility and control of their cashflow. You can integrate our market-leading digital services into your business banking apps, including:

Easy-to-use spend alerts and controls

Cash flow management

End-to-end invoice handling

In-store mobile payments

Transform your small business customers’ digital experience. Speak to a Mastercard representative at UK Business Banking Forum 2018 or visit mastercard.co.uk www.businessbankinguk.com

Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


Welcome to the February edition of the UK Retail Banker, a newsletter designed to give you an update on news and trends within the UK retail and commercial banking market, contextualised by RFi Group data. At the beginning of the month, we proudly hosted the inaugural UK Business Banking Forum in London, and this edition is jampacked with insights from the day. We hosted mini-interviews with a selection of our incredible lineup of speakers to discuss how the business banking industry is set to evolve. Included is also an overview of the key topics from the day, for those of you who missed the event, or perhaps

fancy a re-fresh on the main insights. Open Banking news permeates across our product news section, as we begin to see small movements across the industry, no doubt a topic we will be exploring very closely across the next 12 months. I hope you enjoy the issue. Kind regards,

Sarah Hollinshead Editor UK Retail Banker shollinshead@rfigroup.com


RFi GROUP INSIGHT

Building the relationship: Relationship management & Commercial Banking WORDS ADAM BOTTLE

I

n the last edition of the UK Retail Banker, we had a look at the opportunities in digital banking in the Small & Medium Enterprise space. This month, we have taken a step up the corporate ladder to look at the channel use of commercial enterprises (businesses with global annual revenue between £10 million and £500 million), but with a slightly different focus. Rather than digital, we’ll look at the importance of the personal touch in the form of a relationship manager (RM). RFi Group’s UK Commercial Banking Council research from the second half of 2017 shows that relationship management already plays a key role in the commercial banking space, but also represents a huge opportunity for financial institutions, with commercial enterprises looking for their relationship manager to play a bigger role in the development and growth of their businesses. Before exploring the opportunities, it is important to analyse the current state of relationship management. Currently, 61% of UK commercial enterprises have access to an RM, with this figure closer to 70% among businesses with more than £100 million in revenue. These are close relationships, driven by frequent contact, with most business operators meeting their RM between monthly and quarterly (25% monthly and 22% quarterly). The frequency of contact increases even further among businesses with annual revenue between £250 million and £500 million, with 57% of these businesses meeting their relationship manager weekly. And this contact is vital to commercial enterprises, as shown by the fact that 72% of commercial enterprises with an RM are extremely satisfied with their overall banking relationship, compared to only 63% of those without an RM. As can be seen from these figures, for many commercial enterprises, RMs are central to the banking experience of commercial enterprises.

Currently, 61% of UK commercial enterprises have access to an RM, with this figure closer to 70% among businesses with more than £100 million in revenue. 06 RFi MEDIA

So, what about the future role of RMs in helping with the growth and development of client businesses? To an extent, this is already the role RMs are taking, with this becoming clear when you look at the types of tasks for which commercial enterprises use their RM. Currently, 32% of commercial enterprises with access to a relationship manager use their RM to get information on banking products, 43% use them to apply for new business accounts, and 48% use them to help apply for business loans. This shows that RMs are currently used when a business wants to make changes and is looking to ensure they choose the most appropriate financial product for their needs, a role in which RMs, who know both the client’s business and the available financial products, are well placed to assist. What supports the view that commercial enterprises are looking for more advisory services from their RMs is that commercial enterprises do not expect their relationship manager to be involved in the day- -to-day aspects of their banking. Less than 20% of commercial enterprises would speak to an RM to complete everyday tasks such as paying bills or making transfers between accounts. This can also be seen in the high use of digital banking among commercial enterprises. Twenty eight per cent of commercial enterprises with access to a relationship manager use internet banking via a desktop or laptop computer daily, with an additional 31% using it weekly. This shows that for commercial enterprises, a multi-channel approach is required, with day-to dayactivities handled online, supported by regular catch-ups with a specialist banker who can advise on the financial products required for the business to meet its goals. The final piece of evidence that the key role of relationship manager is in helping to develop the business can be seen when examining the drivers of RM satisfaction. Commercial enterprises are generally satisfied with their RM, with 70% rating themselves extremely satisfied (8+/10 on a scale of


RFi GROUP INSIGHT

0-10, where 10 is extremely satisfied), with this primarily driven by their RMs understanding of the business’s financial needs, as well as their knowledge of financial products and commitment to the businesses long term goals. Where RMs could improve their performance is by using their business connections to help their clients network and by playing a bigger role in the businesses strategic dialogue. This shows that there are opportunities for banks to increase their role in guiding the development of commercial enterprises, particularly for businesses with annual revenue over £100 million, who also are looking for an RM that can offer them the right solutions at the right time. Financial institutions should therefore look for their RMs to be more involved in their client’s businesses, playing an advisory role where possible to help them make the best strategic decisions regarding financial products and ensure the business is able to reach its financial goals. As can be seen, RMs will continue to play a huge role for commercial enterprises in the future, especially if they are combined with a strong digital banking offering for day-to-day activities. Where the opportunity lies for financial institutions is in RMs taking more of an advisory role in their client’s businesses, focusing on ways to make the best use of financial products and services to ensure that businesses goals are met. What is clear, is that financial institutions that offer this type of service will be putting themselves in an excellent position to thrive into the future.

As can be seen, RMs will continue to play a huge role for commercial enterprises in the future, especially if they are combined with a strong digital banking offering for day-to-day activities.

UK RETAIL BANKER 07


THOUGHT LEADER INTERVIEW

C-SUITES FROM THE UK BUSINESSES BANKING ECOSYSTEM DISCUSS AN INDUSTRY ON THE TIPPING POINT OF CHANGE WORDS SARAH HOLLINSHEAD

U

K business, from small to large, are the backbone of the economy and therefore supporting business owners with their finances is essential for stability and growth. Whilst digital innovations have transformed the merchant experience, are financial institutions doing enough in their own technological revolutions to support the industry? Are the current financial offerings diverse enough to suit this big pool of clients? Finally, are the traditional players doing enough to keep up with new innovative players? These questions were discussed at the UK Business Banking Forum on 1st February in London. A selection of the speakers came together to share their views on the future of the business banking sector.

It is important to specialise. But then you need to underpin that with fantastic technology and online banking services.

Ian Rand, CEO, Business Banking, Barclays

088 RFi MEDIA


THOUGHT LEADER INTERVIEW

Ian Rand CEO, Business Banking, Barclays

Katrin Herrling CEO & Co-founder, Funding Xchange

George Bevis Founder & CEO, Tide

Anne Boden CEO, Starling Bank UKRETAIL RETAILBANKER BANKER099 UK


10 RFi MEDIA


THOUGHT LEADER INTERVIEW

Ian Rand CEO, Business Banking, Barclays

The trick is to build the infrastructure first, to take advantage of these services, and I am very pleased with how ready we are for open banking next year.

George Bevis Founder & CEO, Tide

There are plenty of other fintech services which we will be introducing to our members in the next few months.

What is having the biggest impact on the market today?

What do you think is driving the change in the business banking space?

A couple of years ago I became frustrated with people coming into the office and talking excitedly about blockchain, bitcoin, or 3D printers, without really having thought through how large the impact of such technologies would actually be on SMEs.

Apart from Tide, there is very little change sadly. The change that Tide is driving is about instantaneous access to services which remove SME’s admin overhead. Banking is the least interesting of these services, but the most universally required so it’s where we’ve started. There are plenty of other fintech services which we will be introducing to our members in the next few months.

On the other hand, when we sat down and reviewed the horizon for all the emerging technologies, we quickly realised that the ubiquity of APIs, and the emergence of open banking legislation, had far greater potential to lead to new products and services, and competitors, and much more quickly. Therefore, we focused our strategic investment on open banking and data. The trick is to build the infrastructure first, to take advantage of these services, and I am very pleased with how ready we are for open banking next year. How is advances in data analytics changing the SME landscape? It is interesting because as banks are on a journey with this, so actually are SMEs. Some business owners spend a lot of time analysing their client data and industry data, many do not. I think it is one of the roles of the banks, like Barclays, using our relationship model, to have people on the ground talking to clients about ways in which they can run and grow their business through learning how to use these tools. What gives Barclays the edge in business banking? It is important to specialise. But then you need to underpin that with fantastic technology and online banking services. The business will also want a relationship manager available in their community that they can talk to, and a good telephony model. With our scale, digital service as well as having specialisation, that’s where our advantage really comes into play.

How is open banking going to transform the market? A bit, but not a lot. Easier accounting integration will have widespread takeup. I’m less convinced about other services. The most useful services have little do to with APIs. What is your opinion on the inter-play between FinTechs and incumbents in this space? Business banking has seen little product innovation when compared to personal current accounts (PCAs), and SMEs were experiencing many pain points such as lengthy account opening processes, portability of transaction history and simplified fee structures.

Banking is the least interesting of these services, but the most universally required so it’s where we’ve started. George Bevis Founder & CEO, Tide UK RETAIL BANKER 11


THOUGHT LEADER INTERVIEW

Anne Boden CEO, Starling Bank

It enables customers to own their data, instead of the banks, and gives them the ability to securely share it with other financial technology providers should they want to.

Katrin Herrling CEO & Co-founder, Funding Xchange

We are asking customers to extend trust to companies that are promising to safeguard their data. This requires trust.

What do you think is driving the change in the business banking space?

Who is set to benefit most from open banking regulation?

Business banking has seen little product innovation when compared to personal current accounts (PCAs), and SMEs were experiencing many pain points such as lengthy account opening processes, portability of transaction history and simplified fee structures. This was evidenced in a 2016 CMA review. There was a need for change, and Starling are already investing heavily in technology to launch an innovative business current account to our customers in early 2018.

Open Banking has the greatest transformational potential where the access to live, transactional data enables an ecosystem to work more efficiently. In particular the SME funding ecosystem is ripe for transformation – access to banking data has the potential to enable greater automation of credit decisioning and slash the costs of risk assessment. Critically, the automation of underwriting will create much greater transparency and competition as it becomes easier to compare different offers for funding. Open Banking, together with initiatives stemming from the CMA review, has the potential to shake up a space that has for too long been difficult to navigate. Small businesses will be big beneficiaries by making easier to assess and access different funding solution.

How is open banking going to transform the market? The Competition and Markets Authority have mandated that banks open their APIs to enable customers to securely share their data with third parties, as of January 2018. This transforms the market because it increases competition and innovation. It enables customers to own their data, instead of the banks, and gives them the ability to securely share it with other financial technology providers should they want to. This, in turn, gives customers seamless access to alternative financial products not offered by the banks. Starling has become the first UK bank with approval from the regulators to offer customers direct access to a wide range of financial products, all from within the app. What is your opinion on the inter-play between FinTechs and incumbents in this space? Given that FinTechs can better compete with banks under this regulation, it will enable more competition to the benefit of customers, meaning they can access better products with better prices, while simultaneously motivating banks to improve price and user experiences. Banks have realised that they can't keep doing what they've been doing for decades and see the same results - they need to evolve their company, their culture, and their business model as technology changes and creates new possibilities. At Starling, we wholeheartedly believe that giving customers ownership of their data is a good thing, and simply want to help them to share it securely, which is why we were the first licensed UK bank to have open APIs. 12 RFi MEDIA

How can business banks seize this as an opportunity? We are asking customers to extend trust to companies that are promising to safeguard their data. This requires trust. If you look at the customer research that has been done on this topic, it is clear that customers still trust their banks more than almost any other institution with their data. So when it comes to adoption of new solutions, customers will trust banks more than almost any other party. The challenge for banks is to carefully choose how to build on this trust and bring innovative solutions to their customers – this will require banks to think about the bigger implications of what ‘Open Banking’ means for their own relationship with customers. Who do business owners want to turn to for help? Will we see this change? It is quite interesting to see that banks seem in two minds about whether want to be advisors or just sell products. On the one hand, the focus on reducing frontline costs and the move towards digital banking has killed the traditional relationship customer management model for smaller


THOUGHT LEADER INTERVIEW

As a result the business banking operations are lagging behind in digital capabilities – if you look for example at basic online facilities like account opening or lending. So more investment is needed. Katrin Herrling CEO & Co-founder, Funding Xchange

The challenge for banks is to carefully businesses. Apart from some niche players, the frontline engagement model has largely disappeared in all but name. This is not really a problem if the banks had a self-serve model for smaller businesses that tend to be more digitally enabled and prefer the 24/7 model that online banking offers. Unfortunately, the business banks have been starved of investments as consumer banking has benefited from digital funding. As a result the business banking operations are lagging behind in digital capabilities – if you look for example at basic online facilities like account opening or lending. So more investment is needed. On the other hand, the High Street banks have made substantial investments in being able to help and support start-ups and fast growth companies. It is clearly ‘cool’ to start a business – and probably one of the things where both government and banks agree that everyone benefits from the UK becoming a start-upNation. Banks want to be seen as actively supporting individual companies but also creating an environment that makes it easy to start a business.

choose how to build on this trust and bring innovative solutions to their customers – this will require banks to think about the bigger implications of what ‘Open Banking’ means for their own relationship with

To read more interviews by RFi Media in all past UK Retail Banker editions, follow @RFiMediaGRB on Twitter or feel free to visit the archive centre on our website: www.rfigroup.com/rfi-media/magazines

customers. Katrin Herrling CEO & Co-founder, Funding Xchange

UK RETAIL BANKER 13


SPECIAL FEATURE

“BLOCKCHAIN WON’T CHANGE BUSINESS BANKING IN THE NEXT 5 YEARS… OPEN BANKING FUNDAMENTALLY WILL” – THEMES FROM THE UK BUSINESS BANKING FORUM WORDS SARAH HOLLINSHEAD

T

he business banking industry is truly on the tipping point of change, as discussed at the RFi Group UK Business Banking Forum on 1st February, by a selection of the most prestigious leaders from across the ecosystem. In the context of Brexit, new regulations such as PSD2 and Open Banking, a significant change in customer expectations and a new world of technology, the timing seemed right to open discussions on the future of this very complex aspect of financial services. With a look to the biggest impacts on change, the quote of day came from Ian Rand, CEO, Business Banking, Barclays who concluded that “blockchain won’t change business banking in the next 5 years, Open Banking fundamentally will”. Business growth and sentiment is on the up Before exploring solutions and opportunities for financial institutions, the day opened with two informative keynote presentations to set the scene on the business climate. Mike Jakeman from the Economist Intelligence Unit presented data portraying an improved global economy for 2017, and

14 RFi MEDIA

a belief that the momentum would be sustained for 2018. Charles Green, CEO, RFi Group then presented the customer view, and based off insights from the half-yearly RFi Group UK SME & Commercial Study, showcased that “business sentiment, despite everything going on, is on the rise.” UK businesses, from small to large, are the backbone of the economy and therefore supporting business owners with their finances is essential for stability and growth. More specifically, said Niels Turfboer, Managing Director, Spotcap the importance of “sustainable growth” is key for the wider economy. He explained, “what we don’t hear enough about is sustainable and profitable growth, it’s about the right mix of finance.” Cristina Alba Ochoa, CFO for Oaknorth Bank reiterated this point, saying “it’s important for advisors to find what customers actually need, there’s no one product. We have to grow, but profitably.” Disruptive lending models, such as those presented by Oaknorth and Spotcap, are often pressed on the risk surrounding their pricing models, however this theory was overturned on the stage. Rich Wagner, CEO for Casplus


SPECIAL FEATURE

explained, “When I say we underwrite a current account in seconds, I actually mean it […] The FCA will say we’re reckless […] but when we say in seconds, we go through huge amounts of data analysis […] We need to convince people that it can be done. We can tell them straight away no, rather than waiting four weeks to be told no.” Education plays an important role here, in ensuring customers have an understanding of how much they actually need to borrow in order to grow responsibly, and the wealth of services out there to suit their needs. It was unanimously agreed that this is the role of financial institutions to educate, and that there is currently not enough of this to ensure sustainable growth for businesses and to help grow the economy. It’s not all about the digital Katrin Herrling, CEO, Funding Xchange

A theme that transcended across the entire day was around perfecting the right service model, and, perhaps surprisingly if considering the retail banking environment, it was not all about digital. Rand kicked this off with a bold statement: “Relationship based and digitally driven is the only model that will survive”. To put this into perspective, Rand highlighted the importance of this model in instances of distress, for example, with the recent collapse of construction company Carillion, how important it was that there was someone who could call up individual clients and say, “can I help?”.

Relationship based and digitally driven is the only model that will survive.

Ian Rand, CEO, Business Banking, Barclays

FinTech leader Katrin Herrling, CEO, Funding Xchange concurred with this sentiment, adding “customers want choice on how we interact with them. It’s different depending on their needs… the human relationship for an SME in particular is critical.” The audience heard from Philip Acton, CEO, CivilisedBank, who shared their unique servicing model, which focuses on local relationships and expertise. “How do you bring traditional values into the digital platform? Local, onsite, and on call, with digital supporting and not taking the place of the human manager… Our local bankers live and work in the areas where we operate and that gives us real power and credibility with customers.” The big opportunity is around data With the conference taking place just over two weeks after the regulation was officially implemented, Open Banking took centre stage. This brought up some fundamental questions around data; the varying possibilities for differing sized institutions, benefits for customers, and concerns around ownership.

Charles Green, CEO, RFi Group

Anne Boden, CEO, Starling Bank, who although has made headlines in the retail banking space for a number of years, provided a perspective of a newer player in business banking, highlighted their UK RETAIL BANKER 15


SPECIAL FEATURE

outlook on open data: “We aim to give the customer the power to use their data to get a better deal. We have to be providing data to businesses, so they can make their own decisions.” When considering the ‘openness’ thus created across the ecosystem, and in levelling the playing field, George Bevis, CEO, Tide poignantly stated that “whilst everyone has access to the same data, what can be done varies.” Rand expressed Barclays’ position on big data, arguing that it doesn’t matter what FinTechs or other organisations are doing, how banks can turn big data into insight is the one of the most exciting developments in banking. The key message is around acting on the opportunity, smartly summarised by Herrling: “We don’t just think of the risks of doing something, the risk of not acting and engaging is almost the biggest”. The utility of data from a payments perspective was discussed by Cathy Dargue. Head of Receivables and Payables, RBS, who said “A payment is a payment. The complexity and depth of the data can be used to leverage new opportunities.” Trust is key When considering who the ‘winners’ will be in this shifting ecosystem, the official line was, as predicted, the customer. Yet, what came out of the conversations on the day was the integral role of trust, and perhaps this as a commodity for banks to leverage. RFi Group’s data, as presented by Green, showed that 35% of businesses were looking to switch, which is juicy if working in uptake, worrying if working in retention. Yet, the data continued to show that “businesses don’t need to love banks, businesses need to trust banks”. Even the FinTech protagonist in the room, Herrling, stressed this as point: “the banks today own the customer relationships and the customers trust.” With something as important and potentially unpredictable as a business, it seems business owners want to know they are working with a financial partner they can rely on.

For information on this, and future events, please contact: Sarah Hollinshead, Group Head of Content, RFi Group Shollinshead@Rfigroup.com

16 RFi MEDIA


SPECIAL FEATURE

UK RETAIL BANKER 17


SAVINGS & CURRENT ACCOUNTS

Savings & Current Accounts WORDS MARIA URENA

18 RFi MEDIA


SAVINGS & CURRENT ACCOUNTS

The new account allows customers to hold up to 28 currencies in a single account, and the linked debit card can be used to make payments directly in local currencies.

TransferWise launches borderless current account

T

ransferWise has launched a new borderless current account and debit card.

The new account allows customers to hold up to 28 currencies in a single account, and the linked debit card can be used to make payments directly in local currencies. The account is targeted towards those who live and/ or work in different countries, with TransferWise chairman and cofounder Taavet Hinrikus saying: "The borderless account is a game changer for anyone living or working between countries. Opening a bank account abroad is incredibly difficult without a local proof of address, but the borderless account can be opened in minutes. For expats, second homeowners, freelancers, sole traders and more the borderless account is invaluable”. The account has currently been released to 1,000 customers.

Monzo sets new overseas ATM fees App only bank Monzo has introduced a new charge on ATM withdrawals made outside the UK. Under the new fee structure, Monzo users can withdraw £200 while abroad free of charge every 30 days. Any withdrawals above this value will be charged 3% of the amount withdrawn. Card payments will remain free of charge, as will UK ATM withdrawals. Restrictions on ATM withdrawals for prepaid card customers of £250 a day, £1,000 a month, and £3,000 a year will still apply, although the limit for current account holders is £400 a day, £5,500 a month, and no yearly limit. The change was brought about after Monzo found offering fee -free ATM withdrawals abroad was unsustainable in the long term. The fee structure was decided by a poll of Monzo users.

UK RETAIL BANKER 19


CURRENT ACCOUNTS

NatWest launches new current account switching incentive To get the reward, consumers need to apply before February 16th, complete their switch, deposit at least £1,500 into the account, and login to the account online or through the mobile banking app before the end of March 16th.

NatWest has launched a switching reward for new and existing current account customers. NatWest will give £125 to each new or existing customer who switches into one of its rewards accounts: NatWest Reward, Select, Rewards Silver, Reward Platinum, or Reward Black. Those that already have one of these accounts can still access the reward if they switch another current account held with a different institution to NatWest.

RFi Group data shows that rewards such as cashback are a key driver of current account choice, with 7% of current account holders saying rewards are the most important factor behind their choice of a current account. Application incentives are also a factor for an additional 3% of current account holders, showing that 1 in 10 could be influenced by an incentive such as that offer by NatWest, and explaining a possible driver behind the introduction of this offer.

NatWest will give £125 to each new or existing customer who switches into one of its rewards accounts: NatWest Reward, Select, Rewards Silver, Reward Platinum, or Reward Black.

NatWest’s decision also brings it into line with many other providers, such as HSBC, that already offer cashback switching incentives.

IF YOU WERE TO OPEN A NEW CURRENT ACCOUNT, WHAT WOULD BE MOST IMPORTANT TO YOU IN SELECTING A SPECIFIC CURRENT ACCOUNT? Top 15 most important features. Interest rates

19%

Online banking services

15%

Fees and charges

10%

Customer service

9%

Branch locations

8%

Offers me rewards

7%

It's from the bank I'm currently using

6%

Debit card access

5%

The brand of the account provider

4%

Mobile banking app

4%

Application incentives

3%

Overdraft facility

2%

A recommendation

2%

Domestic ATM locations

2%

Minimum balance requirement

1%

Source: UK Priority & Retail Banking Council 17H2

20 RFi MEDIA


SME & COMMERCIAL

SME & Commercial Banks provide £225m in funding for firms affected by Carillion liquidation WORDS JOSEPH SHARANGPARNI

F

ollowing the collapse of construction firm Carillion in January 2018, three major banks - Lloyds Banking Group, HSBC, and RBS Group - have launched emergency funding programs for their small business customers that have been affected by the Carillion failure. Lloyds Banking Group have launched a £50m fund, HSBC a £100m fund, and RBS Group have made £75m of funding available, bringing the combined total to £225m. The moves are designed to minimise the impact to, and assist the recovery of, SMEs both in the private and public sector who have been affected by the Carillion collapse.

Greg Clark, Secretary of State for

Business, Energy and Industrial Strategy

Other banks are expected to follow this example, as Secretary of State for Business, Energy and Industrial Strategy Greg Clark said: “It is essential that small businesses exposed (to the Carillion collapse) are given the support they need by their lenders, and I look forward to other banks following suit”. Managing Director of SME banking at Lloyds Bank Commercial Banking shares this sentiment, stating: “We know how critical it will be for businesses within Carillion’s supply chain to receive support with their cashflow, to help them through the temporary challenge to their business. These (funds) will ensure these small businesses have the financial support they need to get themselves back on track.”

UK RETAIL BANKER 21


SME & COMMERCIAL

Countingup launches business current account WORDS JOSEPH SHARANGPARNI Challenger bank Countingup has officially launched its mobileapp only business current account aimed at freelancers, sole traders, and contractors. The new account will come with a sort code and account number, as well as a Mastercard debit card. It also includes tools for profit and loss reporting and categorising transactions automatically. Countingup intends to launch more accounting functionality throughout 2018. The account is designed to give sole traders access to a specialist business account and automate as much of the financial management side of running a business as possible, with Countingup CEO and founder Tim Fouracre saying: “Often sole traders are forced to use personal accounts because the process of setting up a business account is arduous, slow and expensive. This creates a huge headache when trying to make sense of your business finances�. The new account is free to open and Countingup claims its account can be opened through the app in five minutes.

22 RFi MEDIA

Often sole traders are forced to use personal accounts because the process of setting up a business account is arduous, slow and expensive. This creates a huge headache when trying to make sense of your business finances. Tim Fouracre, CEO and Founder, Countingup


SME & COMMERCIAL

Virgin Money launch SME savings accounts WORDS JOSEPH SHARANGPARNI Virgin Money has begun its move into the business banking market with the launch of a savings account for SMEs. Virgin Money will offer SMEs an instant access savings account at a rate of 0.60%. To help attract business customers, Virgin will also be offering a range of discounts on other products offered by the wider Virgin group. Virgin is aiming to acquire ÂŁ500m in SME deposits within the first year, and ÂŁ5bn within five-years. Looking forward, Virgin Money also plans to launch business current accounts later in 2018 and develop a fullyfledged SME banking division by 2020. Starting an SME division with the launch of savings and current account products could be a good move for Virgin Money, with RFi Group data indicating that amongst SMEs intending to take up products in the next 12 months, a business current account and a business savings account are the products they are most likely to be interested in, with around 1 in 3 expecting to take these products out, suggesting there will be movement in this space for Virgin to capture.

WHAT BUSINESS BANKING PRODUCTS DOES THE BUSINESS INTEND TO TAKE UP IN THE NEXT 12 MONTHS? By SMEs that intend to take out products, top 10 Business operating/current account

35%

Savings account

33%

Business insurance

26%

Cash management account

25%

Fixed term deposit account

20%

Business credit card

18%

Export finance

17%

Invoice factoring

14%

Spot FX

14%

Overdraft

14% 0%

10%

20%

30%

40%

Data: 17H2 UK SME Banking Council

UK RETAIL BANKER 23


LENDING

Lending WORDS SACHIN VISAVADIA

First time buyers able to invest in buy-to-let properties with Landbay

P

eer-to-peer lender Landbay, which specialises in allowing retail and institutional investors to invest in buy-to-let mortgages, has updated its lending criteria to allow affluent first-time buyers to invest in buy-to-let properties. The change is designed to help professional people who do not own a home, to invest in property and gain a foot in the investment property market. To qualify for Landbay’s products, first time buyer investors must be employed and earn a minimum of £85,000 annually. They do not need to own a residential property or even hold a mortgage on a residential property. To invest in Landbay’s products, investors must go through one of Landbay’s approved distribution partners.

To invest in Landbay’s products, investors must go through one of Landbay’s approved distribution partners.

About the new product, Paul Brett, Landbay’s Managing Director of Intermediaries said: “We’re constantly looking at new ways to open up access to aspiring landlords. The introduction of buy-tolet mortgages for first time buyers will now give people in higher income brackets an opportunity to purchase a property and rent it out as a credible investment.”

Paul Brett, Managing Director of Intermediaries, Landbay’s

24 RFi MEDIA


LENDING

Lower-income households struggle with debt Official figures from the Institute for Fiscal Studies (IFS) have revealed that unsecured borrowing, such as overdrafts and personal loans, has been rising by nearly 10% a year in the UK. The report also found that around 50% of British households have some sort of unsecured debt, with 43% of that being an unsecured loan from a financial institution.

The report also found that around 50% of British households have some sort of unsecured debt, with 43% of that being an unsecured loan from a financial institution. In addition to this growth, IFS figures show that 1 in 4 of the very lowest-income households are falling behind on their loan repayments or have very high levels of debt repayments, with the data also showing that consumers in the younger generation are more likely than the older generations to be struggling with debt, as are those with less education.

UK RETAIL BANKER 25


LENDING

New retention range by Skipton Building Society Skipton Building Society have teamed up with intermediary Legal & General (L&G) to launch a range of retention focused residential, buy-to-let, and interest only mortgage products, available only to current Skipton customers. According to RFi Group’s data, 34% of current mortgage holders find the idea of incentive schemes and how their provider rewards loyalty extremely important to their choice of a mortgage provider. As such, offering special retention focused mortgages could be seen to be rewarding loyalty, which could have both retention and acquisition benefits for Skipton.

According to RFi Group’s data, 34% of current mortgage holders find the idea of incentive schemes and how their provider rewards loyalty extremely important to their choice of a mortgage provider. The residential product range includes a mortgage with a fixed rate of 1.74% for a three-year fixed loan up to 60% loan-to-value (LTV). Other products within the range include a four-year fixed rate mortgage at 1.99% up to 60% LTV, and a seven-year fixed rate mortgage at 2.24% up to 75% LTV. Also available is a five-year fixed rate product at 2.09% for 75% LTV, which is exclusively available through L&G. All products come with the benefit of having no fees and a free standard valuation. The buy-to-let range is available to existing buy-to-let borrowers and includes a three-year fixed rate loan with rates starting from 2.64%. THINKING ABOUT YOUR CURRENT MORTGAGE, HOW IMPORTANT WERE THE FOLLOWING FEATURES IN THE CHOICE OF YOUR MORTGAGE % that said extremely important (8+/10) 76%

65%

59%

55%

54% 38%

Interest rate offered

Type of mortgage product

Amount that you can borrow

Lenght of the mortage

Easy application process

Source: UK Mortgages Council, 17Q4

26 RFi MEDIA

Free valuation

34%

It recognises and rewards your loyalty and lender incentive schemes


LENDING

The buy-to-let range is available to existing buy-to-let borrowers and includes a threeyear fixed rate loan with rates starting from 2.64%

UK RETAIL BANKER 27


CARDS & PAYMENTS

Cards & Payments

SafeCharge approved by the FCA as a payment processor WORDS MARIA URENA

P

ayments platform SafeCharge has received approval as a payments processer in the UK from the Financial Conduct Authority (FCA).

The new approval will mean SafeCharge will be able to continue operating in the UK after Brexit, regardless of what changes are made to passporting rules. Up until now, SafeCharge has been operating in the UK with authorisation from the European Electronic Money Institution. The approval will also allow Safecharge to expand its service offering to its existing customer base and new clients. David Avgi, CEO of SafeCharge, said about the approval: “Our merchants now have the additional validation and confidence provided by the FCA authorisation. This license places SafeCharge in a key position to capitalise on the expansion of its business and services in the UK market and other EEA members.�

Our merchants now have the additional validation and confidence provided by the FCA authorisation. This license places SafeCharge in a key position to capitalise on the expansion of its business and services in the UKmarket and other EEA members. David Avgi, CEO of SafeCharge

28 RFi MEDIA


CARDS & PAYMENTS

Google Pay to replace Android Pay and Google Wallet WORDS MARIA URENA Google has announced that it will be simplifying how it presents its different online and mobile payments options by unifying Android Pay and Google Wallet into a single app, which now will be called Google Pay. The Google Pay brand will include Android Pay, Chrome’s credit and debit card storage technology, and the Google Wallet service, which is a peer-to-peer payments service in which users can send or receive payments via email or phone number. The combined service is designed to reduce the number of occasions where consumers need to input their credit or debit card details by automatically retrieving these details across the Google ecosystem. This is expected to improve the user experience by reducing frustration and preventing consumers from abandoning purchases due to the need to input their details. Google will be looking for this rebrand to help drive use of all of its payment services, but in particular, to help Android Pay compete with Apple Pay. RFi Group data shows that of iPhone users with an Apple Pay compatible iPhone, 37% have used Apple Pay, but only 14% of those with a compatible Android phone have used Android Pay, showing that Google has work to do to catch up to its rival.

HAVE YOU USED EITHER APPLE PAY OF ANDROID PAY? % yes, by phone type

40%

37%

30% 20%

14%

10% 0% Proportion of iPhone users that have used Apple Pay

Proportion of Android users that have used Android Pay

Source: RFi Group UK Payments and Innovation Council 2017 H2

UK RETAIL BANKER 29


CARDS & PAYMENTS

Mastercard introduces selfies or fingerprint payment authentication WORDS SACHIN VISAVADIA As of 2019, Mastercard users will be able to verify payments made online, over the phone, or on their mobile using fingerprint scan or facial recognition technology. Mastercard have issued that all banks implement these new biometric authentications on Mastercard debit/credit cards by April 2019. The new authentication methods have been introduced as part of the EU’s second Payment Services Directive that require payment providers to offer “Strong customer identification”. “Strong customer authentication” requires payments to be authenticated using at least two independent elements, with the elements needing to consist of something only the customer knows (such as a PIN or password), something only the customer possesses (such as a card), or something unique to the customer (such as their fingerprint). The combination of card and biometrics will therefore meet these requirements. Consumers will still be able to identify their payment using PIN or passwords after the launch of the biometric options if they so choose. The new tools are expected to help make the payments process quicker and smoother for consumers and merchants by helping reduce the challenges associated with remembering PINs and passwords. 30 RFi MEDIA

The new tools are expected to help make the payments process quicker and smoother for consumers and merchants by helping reduce the challenges associated with remembering PINs and passwords.


FINTECH

Fintech WORDS JOSEPH SHARANGPARNI

Monzo to disable prepaid cards this April

M

onzo has announced that it will disable prepaid Monzo cards from April this year.

To continue being a Monzo customer, prepaid cardholders will need to sign up to a new current account, which can be done within the Monzo app and without starting a new application. Any Monzo users who do not want to change to a current account will be given 60 days’ notice in February that their account will be closed and any money remaining on the card returned via currently undisclosed methods.

Any Monzo users who do not want to change to a current account will be given 60 days’ notice in February that their account will be closed and any money remaining on the card returned via currently undisclosed methods. Any existing prepaid customers can register for a current account between now and April, with those who do so to receive a new debit card within 5 days. Monzo has also announced that any new customers who apply for a current account will only undergo a hard credit check if they desire an overdraft facility. At the time of writing, an exact date for the closure of the prepaid card service is yet to be confirmed. UK RETAIL UKBANKER RETAIL BANKER 31 31


FINTECH

Pay-per-day travel insurance launched by Revolut Revolut, the London based mobile banking platform, has announced the launch of a pay-per-day travel insurance service that will provide both dental and medical cover. The pay-per-day service will work through the Revolut app, which will use a policy holder’s smartphone location data to recognise when they are abroad and automatically turn on insurance coverage for the dates it is needed.

The pay-per-day service will work through the Revolut app, which will use a policy holder’s smartphone location data to recognise when they are abroad and automatically turn on insurance coverage for the dates it is needed.

32 RFi MEDIA

Revolut has claimed the cost of this service will start at less than £1 per day, with the average Revolut customer who spends 13 days abroad per year spending £11.76 per year. Revolut will also impose yearly cost caps to prevent frequent travellers from incurring large bills, and there will be an option to pay a set price for an annual policy. Revolut has partnered with Thomas Cook Money to provide the insurance. CEO and founder of Revolut Nikolay Storonsky said: “We wanted to create a type of insurance that uses technology to help our customers and only cover you on the days you actually need to be covered – all for the best price.”


FINTECH

Curve gets full consumer launch Following a successful beta testing phase with UK businesses, FinTech Curve has fully launched to all consumers within the UK. Curve offers an app that allows users to link multiple accounts to a ‘Curve MasterCard’. Users can then use the app to decide which account is used to make payments, eliminating the need to carry multiple cards, as well as the need for a specific Curve current account. Curve aims to turn its app into a mobile control centre for all a user’s financial products and accounts.

Curve aims to turn its app into a mobile control centre for all a user’s financial products and accounts. As well as being able to manage the card overall, another feature the Curve app offers is the ability to ‘lock and block’ the card in the event it is lost or stolen. RFi Group data indicates that this feature is potentially highly valued by consumers, with just under 1 in 5 indicating that it is in the top 3 features they would most want to see added to a mobile banking app.

WHICH OF THE FOLLOWING MOBILE BANKING APP FEATURES WOULD YOU MOST VALUE IF MADE AVAILABLE TO YOU? % that ranked 1-3, top 5

View balance (s) without logging in

26%

4-digit PIN login

26%

Fingerprint login

22% 21%

Change your card PIN Manage your card (Lock or block your card, add spend controls, etc)

18%

0%

5%

10%

15%

20%

25%

30%

Source: 17Q4 UK Digital Banking Council

UK RETAIL BANKER 33


ABOUT RFi GROUP

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RFi Group’s syndicated research RFi Group is a global intelligence and media provider focused exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our syndicated research is delivered via our Financial Councils model. Upcoming UK Financial Council research includes:

RESULTS OUT NOW & COMING SOON UK Mortgage Council – 2017 Q4

UK Commercial Banking Council – 2017 H2

UK Savings Council – 2017 Q4

UK Merchant Acquiring Council – 2017 H2

UK Digital Banking Council – 2017 H2

UK Priority & Retail Banking Council – 2017 H2

UK Travel Cards – 2017 H2 UK Payments & Innovation Council – 2017 H2 UK SME Banking Council – 2017 H2

+ UK Digital Banking Council – 2018 Q1 (Coming soon)

Find out how you can access RFi Group’s latest business intelligence! For further information, contact Olivia Cosgrove on ocosgrove@rfigroup.com or +44 (0) 203 862 2166

UK Retail Banker - February 2018 Edition  
UK Retail Banker - February 2018 Edition  

An RFi Group Publication