As the latest crisis to hit the banking sector saw TSB’s business customers struggling to access accounts or even pay HMRC by the quarter’s VAT deadline,
Research of 500 small and medium business owners, commissioned by Prepaid International Forum (PIF), the not-for-profit trade body representing the prepaid financial services sector, found that just under a fifth (18%) are actively considering financial products and services from a new wave of providers using prepaid platforms.
With current usage of such services running at 13%, this could potentially see their uptake more than double as a result of dwindling trust and confidence in the nation’s banks.
The growth of such services is also being helped by the launch of Open Banking, new legislation that allows customers (including business customers) to tell banks to provide their financial data to properly regulated third parties.
Alastair Graham, spokes person for PIF, says:
“Small business customers have reached a nadir in their relationship with traditional banking partners. Branch closures and the move of services online have meant that few now receive any active guidance or support from their bank in helping to grow their business.
“At the same time, many feel that even basic banking services aren’t meeting their expectations. Even without issues such as the recent TSB banking crisis, businesses would like improvements to be made. Whether that is quicker account opening processes, simple lending or transparent and fair charges, the demand for alternatives is growing.
“Tech innovations, combined with legislative changes such as Open Banking, mean that more products and services are being launched, designed specifically to meet the needs of small business customers. SMEs have already shown they will trust other providers when their banks fail to provide adequate services. This has been particularly evident where prepaid platforms offer more versatility, while still being a safe, secure and flexible method to transfer money.”
One such company is B4B Payments, which specialises in services to streamline expenses management, helping business customers to transfer funds instantly where required, while also tracking employee spending, tracking errors, fraud and helping ensure accurate VAT claims.
“We have seen over 100% growth in the use of our expenditure management solution over the past year,” said Paul Swinton, CEO, B4B Payments.
“We are a great example of how SMEs will use financial services from non-banks if there is a meaningful benefit in terms of cost reduction and process efficiency. I am sure the recent problems that bank customers have experienced will accelerate the trend towards alternative providers offering modern and flexible systems with genuinely useful functionality.”