Open Banking is set to fuel prosperity for Britain’s SMEs

Today, Intuit QuickBooks reveals the findings of its global research project “TheOpen Banking Revolution: Invisible, Customer-First, Feel Good”. A first of its kind, this report produced by renowned futures consultancy The Future Laboratory, looks at how Open Banking is set to change the nature of entrepreneurialism, small business and broader society in the coming decade.

Two years on from its launch in the UK, only three fifths (60%) of UK small business decision makers know about Open Banking and are therefore unaware of the profound differences it could make to their business, and the global economy.

The report identifies three trends that will power this disruption and usher in at least a decade of prosperity and financial wellness for the nation’s small business owners.

1. Feel-good Banking: Open Banking will encourage a real intelligence derived from small business owners’ data through AI, giving them control and lessening the financial stresses and administrative burdens that come with running a business today.
2. Invisible Banking: Open Banking is ushering in a new age of hyper-convenience, known as Banking as a Service (BaaS). Banks will shift towards becoming intelligent and invisible, and involve business owners taking meaningful decisions while administrative tasks happen seamlessly in the background.
3. Customer-First Banking: Open Banking is providing small businesses greater ownership of their data. They will have more control and choice to build their Financial Wardrobe – products personalized to their needs that power their productivity and success.

Chris Evans, vice president and UK country manager at Intuit QuickBooks said: “A first-of-its-kind, the report looks at the opportunities Open Banking and associated technologies can bring to small businesses in the UK. Focusing on the catalyst for change that is Open Banking, it paints a picture of a future where financial services and small businesses work hand in hand to drive business success. This is something we at Intuit QuickBooks passionately believe in and work towards every day.

“The Open Banking revolution will empower the small business owners that want to do things differently and embrace new and better ways of working. We can already see how our customers are benefiting from cleaner, richer data from their bank connection within QuickBooks. And, as the full extent of Open Banking capabilities materialise, those that want to power their productivity will build personalised suites of financial services that suit their individual needs and supercharge their competitiveness in market.”

The Future for SMEs
The new future of a mix and match, customisable approach to financial services will see SMEs being able to tailor their financial ‘wardrobe’ to their specific needs – and remove the importance or necessity of having to switch their main banking provider to be able to access the best products.

As the report outlines, many small businesses feel compelled to stay with their existing bank. They worry about whether payments might go missing or that switching accounts may create accounting headaches. This is holding back many businesses from accessing the best financial products, as they are confined to those available from their particular bank account provider. According to QuickBooks research commissioned for the report, almost a third (32%) of SMEs describe poor finance options as holding their business back from growing.

Open Banking opens doors to a new financial marketplace that is more accessible and open – small business owners will be able to choose from an array of options from many different financial providers, both incumbent and new, who will be competing on price and service.

This means; rather than being restricted to the products and services provided solely by their own bank in the past. More than two in five (44%) SMEs agree Open Banking will make the choice of loan providers better, while 36% agree loan rates will be improved.

It will also cut down the administrative time needed to monitor and apply for the most competitive deals, appealing to a younger generation of SME business owners (a quarter (24%) of those aged 18-34 feel they spend too much time managing their business finances).

The benefits are already here

Within QuickBooks, through Open Banking, small businesses can easily integrate two years’ of bank transactions for richer insights, from overview dashboards to detailed reports. New functionality within the product, such as the QuickBooks 90-day Cash Flow Planner – which was announced at the end of 2019 – is an innovative tool which will benefit from the rich, accurate and historic transaction data to provide improved benefits and insights to customers.

As the report states, China is already embracing this concept. WeChat, China’s ‘super app’, can already do everything from insurance to investments; invoicing to peer-to-peer payments. Open Banking has the power to drive a supercharged version of this solution, using an interconnected suite of specialist financial products that in combination offer the best possible solution for each entrepreneur’s unique business needs.

The Open Banking revolution is about to take off. It’s time for Britain’s small businesses to embrace the opportunity.

For more information and to read the full report, visit: www.quickbooks.co.uk/open-banking-revolution

Government approach to apprenticeships ‘not working’

As the retail industry continues to undergo monumental structural and technological change, apprenticeships remain a vital way in which retailers increase the skills and productivity of their workforce.

Retail requires employees at all skill levels throughout their stores, head offices, warehouses, delivery networks and wider supply chains. Employing over three million workers across the UK, rises in productivity in retail (5.1% in 2018) have outpaced the UK as a whole (0.5% in 2018).

Retailers contribute £160m per year into the Apprenticeship Levy. Yet the current system is overly rigid, preventing many retailers from making full use of their Apprenticeship Levy pot. The apprenticeship standards, under which all apprenticeships must exist, are not being developed and approved quickly enough, holding back take up by the industry.

The latest statistics show the extent of the problem. Apprenticeship starts decreased by 5% to 125,800 in Q1 2018/19. For retail, however, starts fell by 15% overall, with a 20% drop in level 2 starts. Furthermore, a 2018 report by The Open University suggested the current skills gap in the UK was costing businesses £6.3bn.

On Tuesday, during National Apprenticeship Week, over thirty MPs from all parties gathered in parliament to listen to Rob Halfon MP, chair of the Select Committee, and Helen Dickinson, chief executive of the British Retail Consortium, explain how the UK must reform the Apprenticeship Levy ahead of the Budget to allow retailers to level up the skills of their workers.

Helen Dickinson OBE, chief executive of the British Retail Consortium, said

“The Government’s current approach to apprenticeships is not working. Retailers continue to pay into an Apprenticeship Levy pot, yet the number of starts has been falling dramatically. Government should make good on their pledge to reform the Levy, allowing retailers to make better use of the system and increasing the investment they make in the UK’s three million retail workers.”

Rob Halfon MP, chair of the Education Select Committee, said:

“I want to thank the BRC for all their work on apprenticeships and making National Apprenticeships Week 2020 so special in parliament. We have to ensure that retail apprenticeships are a real ladder of opportunity for people wanting to get skills and jobs for the future. We need to look at possible reform of the levy and the tax system to make sure that we can incentivise and help retailers navigate through the bureaucracy and are encouraged to see apprentices as a vital part of their workforce.”

IR35 pushes freelancer confidence to six-year low

Freelancers’ confidence in their businesses over the next three months has been driven to a six-year low by government tax policies and regulations relating to freelancers, according to IPSE (the Association of Independent Professionals and the Self-Employed) and PeoplePerHour’s Confidence Index.

Government tax policies and regulations have also driven freelancers’ 12-month business confidence to the third-lowest level since the Index began.

The tax policy in question seems to be the proposed changes to IR35 due in April. This is because the overall drop in confidence was driven by the two groups most likely to be affected by the changes: freelancers in Standard Occupational Categories 1 and 2 (including managers, directors, senior officials and professional occupations).

Freelancers’ confidence in their own businesses has dropped sharply despite the fact that their confidence in the wider economy is now recovering. This is because of the rising prospect of a Conservative victory and a break to the Brexit deadlock when the survey was taken.

Freelancers’ earnings have also dropped by 6% this quarter, and they expect them to continue to fall, while 71% also expect their business costs to rise over the coming year.

Inna Yordanova, senior researcher at IPSE said: “Freelancers’ confidence in their business performance has reached record lows and this seems to be because of fears about the changes to IR35 due in the private sector in April.

“The IR35 changes appear to be behind the confidence dive because confidence has fallen sharply in the two groups that will be affected most by them: SOC1 and 2 freelancers. In fact, if you focus on these groups, which include managers, directors, senior officials and professional occupations, their confidence has truly plummeted this quarter.

“The drop in freelancers’ business confidence is all the more striking because it comes at a time when their confidence in the wider economy is actually starting to recover.

“This alarming slump in freelancer confidence should be a wake-up call to government. The changes to IR35 are causing alarm right across the freelance sector and they should be halted before they do serious damage to this vital part of the workforce.”

Professor Andrew Burke, dean of Trinity Business School, Trinity College Dublin, and one of the Index authors, said: “It’s a testament to the strength of the freelance sector that despite a fall in fourth quarter earnings and day rates since a year ago, that high-skilled freelancers still earn more than twice the income of equivalent employees. That said, Brexit and the associated weakness in the UK economy have caused freelancers to expect their business performance in 2020 to underperform 2019.”

Xenios Thrasyvoulou, founder and CEO of PeoplePerHour comments: “I am disappointed, but not surprised, to see another fall in freelancer confidence this quarter, to the lowest in six years. It seems that whilst freelancers are more confident about the wider economy, their confidence in their own industry has fallen off a cliff, thanks to the IR35 changes coming into play in April.

“There is still a chance for government to address these issues and listen to the concerns of this important industry, before more damage is done”

New research shows SMEs are tackling sustainability

New research released today reveals that sustainability is moving up the agenda for businesses across the UK, with over half (57%) of SMEs stating that they would like more information on what they can do to be more sustainable.

The latest data from Collaborate UK, CitySprint’s annual survey of UK SME decision makers and owners, finds that while SMEs are taking steps to improve their sustainability, Government support is falling short. Nearly two-thirds of SMEs (62%) believe that the Government is not doing enough to encourage and incentivise businesses to adopt more sustainable policies.

When it comes to what they’d like to see more of, SME business owners and decision-makers are split – with around half (49%) looking for more investment in infrastructure such as charging points, and a similar amount (48%) interested in receiving additional advice on how legislation may be changing in terms of sustainability requirements.

Encouragingly, the research also shows that SMEs have welcomed recent regulation in this area. Nearly half (43%) of London SMEs believe that the Ultra Low Emission Zone (ULEZ) introduced in April 2019 has improved the sustainability of their operations, with only 16% stating that it’s had a negative impact. Businesses outside of London are also positive when it comes to regulation, with 69% of UK SMEs stating that the Clean Air Zones due to be rolled out in cities across the UK will have either an unnoticeable or positive impact on their operations.

Rosie Bailey, director of business development at CitySprint, commented on the findings: “As a leader in the final-mile delivery space we have long understood our responsibility to reduce the impact of our operations on the planet, so it’s encouraging to see the increasing importance of sustainability to the UK’s SME businesses, with concrete plans being made to incorporate more sustainable operations into their growth.”

She continued: “Despite positive steps, our annual survey continues to find that government support in this area is lacking. We’d encourage SME owners to look closely at their supply chain to see where they can make easy wins with their sustainability offer, and consider forming partnerships with other businesses, that have areas of shared interest in order to share best practice and work towards a common goal.”

Previously released findings from CitySprint’s Collaborate UK research found that:

• SMEs have had little support in navigating the challenges of Brexit — over 1 in 5 (21%) haven’t seen or accessed any Government guidance or support at all since 2016.
• On average, respondents estimated that the increased uncertainty of the last three years has cost their business over one million pounds in terms of lost revenue/ turnover, despite the fact that the UK has yet to formally leave the EU.
• In addition, almost half (45%) of UK SME decision makers don’t believe the Government has done enough to help businesses adequately prepare for Brexit.
• Despite concerns over regulations and trade, many are looking further afield for growth, with just under 7 in 10 (69%) planning to expand their customer base in Europe, an increase of 28% since last year.

To download the full Collaborate UK research, visit: https://go.citysprint.co.uk/collaborate-uk-vii