What is SEPA and whom does it affect?
The SEPA (Single Euro Payments Area) initiative hinges on the creation of an area in which all electronic payments in Euros are treated as domestic and with common conditions, thereby removing existing differences between national and international, domestic and cross-border payments. Even businesses not in the Eurozone are affected, if they deal regularly in euro payments within the SEPA zone; effectively all the EU and the EFTA countries.
In order to be SEPA compliant, organisations will need to change the way they initiate and receive payments that will have an impact on their business systems, bank relationships, customer and supplier documentation and even their stationery. The data integrity requirement means that businesses must convert the bank account data they currently hold in domestic or BBAN (Basic Bank Account Number) format to the corresponding IBAN (International Bank Account Number). The IBAN is key to providing the standardisation at the heart of SEPA.
Many corporates may be tempted to convert BBAN to IBAN using a simple algorithmic method, but the level of error inherent in the databases of domestic account numbers will simply be perpetuated using this approach. A thorough validation process is crucial in order to ensure that the migrated data is not only in the correct format and with relevant content, such as bank codes, but has passed an integrity check too. Thus, with properly validated data, the business’ new database has a vastly reduced error rate and so can derive value from SEPA rather than just cost.
Why should this concern us now, if the deadline is in 2014?
Successful and efficient migration takes a considerable time, and there are under 16 months to go until the mandatory February 2014 deadline for Eurozone countries (2016 for non-Eurozone countries), so businesses need to get moving quickly.
The time it takes for conversion depends on the methods used; for example, one approach is for companies to contact all payments originators (staff, suppliers etc) and check their data. Not only would this take a good deal of time and resources, but businesses we speak to estimate that it would cost between €5 and €10 for each account. Alternatively, companies can use simple conversion, and basically piece the data together to create each IBAN, but this does not resolve any data errors and will result in an estimated €6 cost per account because so many of these IBANs will lead to failed payments and, therefore, a poor customer experience. Thus, the most valuable and cost-effective way for businesses to migrate their data is to separate good data from bad via the validation solution, which should cost less than €1 per account number held in the database.
Migrating with a service partner who can manage the process will save time, make the transition smoother, and ensure that the need for inherent data integrity is met. Of course there are budget cycles to be juggled, but businesses should not put migration off as there are only limited migration resources and, as times passes, companies face joining the end of a long queue as everyone rushes to comply.
Does this issue affect regions throughout the EU?
This is pan-EU legislation, so absolutely does impact countries across the EU, although each region has individual nuances which need taking into account. Regions in the Eurozone will be most affected, across both consumer and business payments, but non-Eurozone countries will have to deal with SEPA also. There are transitional arrangements for non-EU countries until 2016, but EU free trade countries for example, like Switzerland, Lichtenstein, Finland and Norway, are expected to deal with IBANs much sooner than that.
Eurozone countries face different challenges, as each has its own legacy account data. For example, Germany has a very complex data system, with around 125 separate integrity rules on account numbers in contrast to the one modulus rule of France, Italy, Spain and Portugal. This region also faces the issue of sub-account numbers, alongside Austria, which brings an added layer of complexity that could cause further migration errors because, if payment processors do not recognise accounts for which the subaccount number has been omitted (which is natural practice in Germany), a payment could be allocated to an entirely separate IBAN and thus a different individual or department.
Other regional problems include the complex banking data structure in Italy and France where each account has four pieces of data attached to it; the issue increasingly faced in France as incoming direct debits from across borders are not authorised and so cannot be processed; and the challenge of having portable accounts and no bank codes as the Netherlands has. In this case, the Netherlands Banking Association (NVB) has worked with Experian to provide a conversion service “IBAN BIC” only for Netherlands accounts and for Netherlands customers. Our research has shown that the data which initiated the estimated 36bn Euro transactions conducted across the Eurozone last year contained errors in around one in eight cases. The ramifications these errors could cause businesses across the SEPA-zone will resonate far and wide.
The biggest challenge though, is how widely differing understandings of SEPA are across the EU. Some countries have been much more proactive towards data conversion; for example, Belgium and Finland are much closer to their migration goals than most other regions and, interestingly, dealing with payments from other countries has shown them the discrepancy and highlighted the problems with such lag.
How could SEPA impact the on-going Eurozone crisis
The SEPA initiative is a key component to strengthening the financial foundations of the Eurozone with improved and more efficient end-to-end straight-through processing of payments. The increased payments stability and eradication of error with improve payment security, increase overall efficiency and save Europe a €20 billion bill – the figure our research suggests could be faced if migration isn’t managed properly.
A fundamental problem with any business dealing with customers and suppliers in foreign fields at present is in differentiating between, and subsequently complying with, the payments format that each business’ bank requires to ensure the payment is processed correctly. SEPA will resolve this, creating a flatter and simpler payments landscape across the SEPA-zone. If payments between companies across the EU can be made more reliable, smooth, and less complex, businesses can thrive beyond their borders and avoid unnecessary costs that few can afford.
What will the payments landscape look like in the long term?
Moving on from the 2014 deadline, hopefully 2016 will see payments in Eurozone countries that are successful end-to-end, error-free, and efficient. A key benefit of SEPA is the enhanced ability it gives European businesses to consolidate and rationalise their payments processing operations and bank accounts. As banking relationships are consolidated, a move to a shared service centre or payments factory also becomes a more easily facilitated option, opening up many efficiency advantages. Therefore, both banks and businesses should be experiencing the benefits of a simpler payments system, and enjoying the knock-on effects this brings in terms of reputation, processing and finances.
In the long term, there is great opportunity in standardising payments globally; other regions can take up the ISO20022 standard, resulting in cost savings and efficiency worldwide. Other areas potentially learning from the EU’s example and taking up the spirit of SEPA standardisation by developing their own programmes would be the greatest long term hope.
What should businesses be doing to achieve compliance in time for the deadline?
Businesses should understand the timeline involved and start preparing for migration as soon as possible. Transitioning data and amending incorrect details will take time, and the work involved should not be underestimated.
Working alongside a service partner who can ensure that you are ready for SEPA and do not inherit old faults into a new system is one option, or a business can approach its bank for support in doing so. Banks have a good opportunity to deliver such services, and can also bring in specialist support to enable them to do so. Such a service provider will ensure that you are ready for the SEPA deadline, and will also ensure you do not inherit old faults into a new system. Approximately, the cost of migrating with a partner less than €1 per account number held in the database, and much of that cost will be addressing payment failures, so the total depends on how error-filled data is, but this is significantly less than other solo approaches.
Of course, validation is an ongoing process as new suppliers will need checking as they get added. Thus, having a watertight system for data checking is the obvious choice; if companies continue to keep their databases up to date then their systems won’t be sabotaged by incoming errors.
The Beaconsoft story and introducing its one-of-a-kind digital campaign intelligence platform
By Nigel Bridges, founding CEO of Beaconsoft Limited
What were you doing prior to setting up Beaconsoft?
Before setting up Beaconsoft, I was involved in the leadership and scale up of SoftIron, a ground-breaking British hardware tech company that has now moved its operations to California.
Prior to that, as well as holding the role of managing director/CEO of a number of UK tech firms, I also acted as an independent adviser and non-executive director of several digital media businesses, one of which was a digital marketing agency.
It was with this business that I first encountered the issues surrounding the lack of transparency and accuracy in digital media expenditure.
This was also when I first joined forces with my Beaconsoft co-founders, Stewart Boutcher and Mike Townend.
What were your main motivations for establishing the business?
As a digital marketing agency, one of the biggest challenges we faced was the reporting of accurate and meaningful information to our clients.
Their marketing budgets were not limitless, and we needed to make sure that money was spent wisely and, in doing so, that we achieved, and exceeded, the desired results.
We needed comprehensive yet easy to understand analytics to measure and report on the effectiveness of campaigns and channels, based on accurate, independent data.
If we had this information, we knew that we could help our clients to make improvements to their digital marketing campaigns by drawing on real and meaningful insights. However, like the vast majority of marketers, we struggled to collect and combine accurate data to achieve this.
We became increasingly frustrated that we couldn’t find the right platform, despite searching the marketing technology industry far and wide. Every piece of technology we discovered fell short of our requirements because they didn’t use independent data and tended to underreport the level of fake clicks.
This is why we decided to create something that no-one else was offering – and thus the concept of Beacon was created.
Please could you briefly explain what the Beacon platform does?
Beacon is an independent digital campaign intelligence platform that uses accurate data to help users know what content, posts, ads, etc. are working effectively and which aren’t across all their digital channels.
The marketing analytics that the platform provides are presented in such a transparent and accurate way that businesses can make better decisions based on independent and reliable data that they can place their trust in.
When did Beacon launch and why did you think it was necessary?
We had early versions to test the market back in 2018 but we launched the platform as it is now in 2019, rolling out regular updates and new functionality since then.
Beacon was born out of the frustration that we felt as a digital agency when facing the challenges of data transparency, data accuracy, multi-channel campaign optimisation and reporting inefficiency.
Beacon is the only platform of its kind on the market that can accurately show how much of a business’ digital marketing budget is being wasted by bot clicks. What exactly are bot clicks?
A bot click is simply a type of click on a post, ad, link, etc. that is not made by a human.
They can either be good or bad for businesses that operate online, but the important measurement from a digital marketing perspective is the number of human responses to messages and clicks through to a website rather than the number of clicks as a whole.
The amount of bot clicks can vary hugely, and can account for as much as 50% of all traffic received in some cases, meaning counting these interactions in campaign statistics can be very misleading.
What threats do bot clicks pose to companies’ digital ad budgets and how widespread a problem are they?
In the world of digital marketing, it is likely that, at best, only 15% of a firm’s budget leads to any form of meaningful engagement with their target audience.
A large portion of this waste is due to online spending on digital ads that attract non-human bot activity and, if malicious bot clicks are left unchecked, businesses will continue to waste their budget on non-human clicks that could be deployed on human clicks, thus making the Return on Investment [ROI] much lower.
It is estimated that expenditure on digital advertising exceeded £250 billion in 2020, with more than 21 trillion ads paid for but never seen by humans each year and digital marketing campaigns subject to fraud rates of more than 50%.
Google and Facebook are forecast to account for 71% of the UK’s online advertising market in the near future, and the prevalence of non-human ad clicks adds up to a massive waste of corporate marketing budgets.
Furthermore, the sheer size of the online advertising market tempts criminals into creating technologies to steal from advertisers, fuelling a global problem within the industry.
What purpose do bot clicks serve and why might people take advantage of them?
Some bots are completely benign and should actually be embraced by businesses.
For example, many email systems will use bots to check the validity of a link to a website, and Google will use bots to list a website for search engine rankings.
These bots are positive and should be encouraged, but at the other end of the spectrum are malicious bots that can, for example, masquerade as humans for the purpose of financial fraud.
How does Beacon help to combat the impact of bot clicks and how much of a difference could this make for businesses?
Beacon attempts to firstly detect bots, irrespective of the originating marketing channel, and remove them from campaign analytics and then stop the content from being presented to that bot so that the cost of that ‘wasted click’ is avoided.
We have spent a long time and a lot of effort developing some very special technology that makes Beacon a compelling choice for any organisation wanting to reduce its digital marketing waste, drive better engagement with human visitors, and ultimately improve their ROI.
In what other ways can Beacon help businesses to optimise their digital campaigns?
It is worth noting that reducing ad fraud is just one component in optimising digital campaigns.
By reducing the number of bot clicks, the analytics received are far more accurate, and considerable costs can be saved.
However, this is a means to an end as the goal is to improve the overall digital marketing campaign, for which organisations need to measure only the results of human interactions across all their digital marketing channels.
Once they have this, they can then improve their campaigns by looking at what works and what doesn’t by making comparisons between each ad, channel, piece of content, etc., safe in the knowledge that they are drawing on accurate and independent data.
Mark Wright – No Longer an Apprentice
Just for context, you won The Apprentice and became Lord Sugar’s business partner in 2014 – you set up your digital marketing business Climb Online and are continuing to successfully grow this business today.
With the beauty of hindsight, would you have started your business journey differently?
When growing up, I always knew that I wanted to be in business and that I wanted to be successful. It wasn’t until I was working for a personal training college in Australia that I realised the true power of digital marketing, as the website I built and ranked on the first page of Google for key search terminology enabled them to accelerate revenue from $2,000 to $240,000 per month.
After I travelled to the UK, I wanted a bank loan to help launch my first business, but I wasn’t able to secure one. A friend suggested I try out for BBC’s The Apprentice as an alternative, which was something I hadn’t heard of, let alone watched before, and the rest is history. I don’t believe in regrets and certainly wouldn’t have changed how I started my business journey. The show provided me with an excellent PR and lead generation platform, and I have had the unique opportunity to meet and learn from some incredible business people, particularly Lord Sugar, for which I am very grateful.
The X Factor winners are often lambasted by the press and not taken seriously as artists by the music industry after winning the show. Have you experienced parallel treatment from the business community after your win?
I would certainly say that I experienced parallel negative treatment from the digital marketing industry when I first won BBC’s The Apprentice; where I was even booed going onto stage to speak at a trade event. However, I am always a big believer in the fact that how people treat and respond to others is more a reflection of themselves and it wasn’t something that I let impact me. The best people in business are those who can support and celebrate other people’s successes and that’s what I always strive to do, regardless of the treatment I receive in return.
Do you feel you have had to work harder to prove your credence as an entrepreneur?
Yes, on some level I do think I initially felt like I had to work harder to prove my credibility as an entrepreneur and a business owner. A lot of people audition and make it on to BBC’s The Apprentice out of a desire for public recognition and 5 minutes of fame, whereas I only wanted to go on the show to secure investment for my business having been rejected from a number of UK banks due to my nationality.
I still hold the record as the only Apprentice Winner to turn over in excess of £1 million during my first year in business and to actually make a profit, and this was largely due to the fact I was so focused on building a large business with strong foundations from the outset.
You became a UK Citizen earlier this year, why have you chosen to stay permanently in the UK?
Australia will always have a special place in my heart and I still have a desire to return and even open a Climb Online office there, but the UK has really become my home. I have made some amazing friends and have created a number of brilliant businesses and am very excited about what the future brings here.
What have been your stand out moments since launching Climb Online?
I have been very fortunate in that I have had many standout moments since launching Climb Online, from being listed twice on Forbes 30 under 30 to creating and hosting CLIMBCON in 2019.*
However, my real stand out moment is quite simple, and it happens almost daily and that is being in the office with my team, receiving positive feedback from clients and helping and mentoring other business owners or aspiring entrepreneurs with their own challenges. There is no feeling like helping someone else succeed or realise their own ambitions and I feel incredibly fortunate that I am able to support and give back to others in such a way.
Have you ever just wanted to throw the towel in and head back to the beach?
All business owners at some point will have that feeling of wanting to throw in the towel, particularly on the days when nothing is going right, and everything feels impossible. However, the true marker of success is the ability to continue to show up each day and work through every single challenge. The ones that do will come out on top, maybe not immediately, but eventually.
I am from a small town in Australia where my Dad owns the local car garage and my mum owns the local hair salon, so when we were all sitting round the table at dinner time, they would discuss the challenges of running a business and I would gain real insight into the hardships. So in starting and continuing to work through my business journey I have always had this in the back of my mind. The power of persistence cannot be underestimated and even on days when I feel like it, I wouldn’t ever head back to the beach.
2020 has been a tough year for business. How was your business affected?
I can honestly say that the start of the COVID-19 pandemic was the hardest period I have ever had to work through in business as like the majority, we lost clients and were forced to make challenging decisions. However, I would also say I have learnt the most about business this year and worked hard to implement an effective survival strategy. This not only meant we were able to continue to navigate through the first difficult three months, but in taking the time to look at our costs, our staff and our processes, have had the opportunity to make vast improvements that have enabled us to thrive beyond pre-COVID levels and really come out on top.
What do you think the long-term impact of COVID-19 will be? Will the economy bounce back quicker than predicted?
I think the figures from Q3 were very promising and show that a ‘bounce back’ is possible. However, with further reports revealing that UK borrowing is now at the highest since records began, it means we have a long way to go and it certainly won’t be easy.
Although there haven’t been any changes to taxes as yet, I do think these will come as we start to see economic recovery and hope any increases don’t impact business owners too heavily, particularly as they have worked so hard to survive this unprecedented period.
How has COVID-19 changed the digital marketing industry?
Although there was an initial hit at the start of the pandemic, with businesses cutting digital marketing spend as a cost-saving exercise, I would actually say the pandemic has since played into the hands of the digital marketing industry by emphasising the importance of having a strong digital presence to sell your product or service online.
There will still be agencies who will be down on a revenue. However this won’t be because the business and sales opportunities aren’t out there, but because they aren’t pushing hard enough and are ultimately using COVID-19 as an excuse. At Climb Online we have won many new clients recently just because we were the only agency to actually answer the phone, which is quite unbelievable and shows that many are still operating remotely and haven’t got the right virtual infrastructure in place.
What advice would you give for business owners struggling to drive new sales?
This is going to sound very simple, but the first thing business owners struggling with sales should do is hire a salesperson to implement a clear and consistent business development strategy. I’ve met thousands of business owners over the years and it still amazes me that the vast majority don’t have any form of sales operation to keep the pipeline full and to proactively sell the product or service. Often the business owner is hesitant to hire a salesperson due to a bad experience or because they believe no one will be able to sell the business as well as they can, and whilst the latter is likely to be true, you still need additional people on the ground generating as many leads as possible. Without a sales team, any form of sales strategy becomes inconsistent and ineffective, limiting the opportunity for growth.
Will you ever retire? Absolutely not. Never.
*CLIMBCON is the only business summit dedicated to teaching businesses how to grow and scale from real life successful entrepreneurs
in an authentic and empowering live event
The evolving payments landscape
Q&A with Prajit Nanu, Co-Founder and CEO, Nium
- The global pandemic has negatively impacted economies around the world, but we’re also seeing an acceleration in e-commerce and consumer behaviours. What trends are you seeing, and what is the takeaway for Nium?
At the start of the global pandemic, no one had a clue on where things were headed. But luckily for Nium, we have a 360-degree view on how different industries are adapting because of the number of industries we serve. For instance, we saw that there was a rise in gaming, e-learning, and e-commerce while the travel industry was significantly impacted.
According to Newzoo, the leading global provider of games and esports analytics, the games market will to grow to $217.9 billion by 2023, representing a strong +9.4% CAGR between 2018 and 2023. This is up from a previous forecast of $200.8 billion. The sudden shift away from the classroom in many parts of the globe also led to a rise in e-learning adoption, where schools have had to distribute gadgets to students to ensure they have access to learning materials. Schools in New York, US for example distributed around 500,000 laptops and tablets to their students in early April.
To cater to these sudden shifts in consumer behaviour, banks are coming to Nium with an accelerated timeline to leverage and implement our services, including instant real-time cross-border payments. This is positive because banks are reacting to new consumer behaviours promptly.
That said, while these are positive trends, we need to think about how we can sustain this momentum into the future. Initially when the pandemic hit, we saw a huge shift of revenues from offline to online channels. However, now that countries are gradually re-opening, we see that many consumers are preferring to go back to offline channels. The question now lies in how we keep up with these changes and continue to deliver great customer service.
- The world is shifting to an API economy, how is this going to impact your customers?
Our definition of an API economy is one that deploys best-of-breed products seamlessly and efficiently – and this is a core mantra of what we believe we are powering at Nium. If you think about it, banks today are being unbundled at a rapid pace. 15 years ago, if a customer wanted a loan or a travel card, they would have had to walk into a physical bank. Today, customers can turn to a small and medium-sized enterprise (SME) lender or any pre-paid travel card business.
Nium is actually leading the charge in this rapid unbundling through our banking-as-a-service (BaaS) offering. For instance, E-commerce companies no longer only provide e-commerce as a service but instead have tapped onto a new range of services within that ecosystem. Companies today can choose partners for their payment solutions – for instance, they can use X for payments, Y for card issuance, and Z for lending. The API impact that Nium makes goes beyond just a few customers; we make it easy for everyone to plug in and rapidly deploy our service.
The future of the API economy is all about how to make APIs easy to understand, and that is where Nium is driving our vision forward.
- What is Nium doing to cater to the under-penetrated segment that may not have access to payments today?
Nium is providing an infrastructure platform catered for anyone – from everyday customers and businesses, to large banks, and even to fintechs – aimed at levelling the playing field through the provision of financial services to all members of the population. In other words, our platform enables our partners to reach out to the population and provide greater access to payments than ever before.
To take a recent example, Nium partnered with Aptiv8, an IT and manpower solution provider, to launch a remittance service called MyRemit. This service allows migrant workers in Singapore to conduct digital remittance transactions via a mobile app, anywhere and anytime. This has been particularly vital during this year’s strict social distancing and lockdown measures, as migrant workers can still remit money back home for their family’s needs through a digital channel.
Similarly, Nium recently partnered with Cebuana Lhuillier, the Philippines’ largest microfinancial services provider, to launch their mobile remittance app, Quikz, in Singapore. Powered by Nium’s Remittance-as-a-service (RaaS) solution, this app allows thousands of Filipinos based in Singapore to send money to their loved ones back in the Philippines. Our platform ensures the transactions are processed securely and in real-time – providing more customers with a safe and more affordable way to make transactions.
- What was 2020 like for Nium and what is it going to be like in 2021?
This year has been interesting for Nium because the pandemic forced us to rethink and review our company playbook for success. At the peak of COVID-19, I gathered my leadership team together to reflect on the impact the world had faced, how the world is going to change, and what we, as a company, need to consider when adapting to these changes. This exercise was extremely useful and it has formed the basis of a refreshed playbook for us.
Our team members came up with many different stories on how we need to over-communicate not only to our clients, but also internally with our colleagues. We also spoke about product prioritisation. For instance, travel used to be an industry that most of our products served, but it has become much smaller today, while other industries such as e-learning and gaming have burst through the scenes. So, do we still create products for the travel industry knowing that it will come back in the next two years, or do we focus on the growing industries right now? The good thing is, because we work with clients across a large spectrum of industries, we have been able to observe these changes panning out early and react swiftly.
Come 2021 and 2022, product will be key for us. There is a lot of pent-up demand across industries that were restricted due to the pandemic, such as travel, and we are looking forward to capturing this new demand, which I believe will definitely come back once we tide over these difficult times. At Nium, we will continue to focus on growing our revenue and expanding our team worldwide.
At the same time, we are also aware of the impact that the pandemic has had on our employees this year. I want to take a brief moment here to acknowledge the efforts of our employees worldwide. They have rallied hard over the past few months, putting in the extra hours as they work remotely, to ensure they deliver quality work. Ensuring that our employees remain engaged and prioritising their mental health will also be a focus for us in the new year.
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