Banks and startups to collaborate on future of payments

Muenster, Germany - April 9, 2011: A close up macro shot of a Mastercard credit card. Mastercard is one of the biggest credit card companies in the world.

Head of strategy, design and change at Royal Bank of Scotland, John Lyons believes ‘the future of

payments will be defined by the collaboration between banks and FinTech startups’.

“I think we are definitely at a point of inflexion” says Lyons, who runs the RBS’s innovation arm. “As the march of tech increases, the importance of tech leadership in payments is going to be much more significant”.

“I don’t think FinTech startups are going to win and big banks are going to lose, or vice versa” extrapolated Lyons. “I think what will happen after a bit of posturing is that we’ll realise that the ecosystem will thrive once you get collaboration between the banks and smaller firms”.

Lyons also suggested that the greatest payment experience is one where the process is made completely invisible. He hailed Uber as a disruptive tech company that doing this successfully.

Mastercard announces Biometric payments to launch in 2016

Muenster, Germany - April 9, 2011: A close up macro shot of a Mastercard credit card. Mastercard is one of the biggest credit card companies in the world.

After widespread whispering amongst the tech community, MasterCard has announced that it will be launching biometric payments for UK customers this summer. This will take payment processing into the realms of sci-fi, allowing customers to pay online using a fingerprint or by taking a selfie.

“The UK is one of the most sophisticated markets for payments technology in the world” said a spokesperson for the American multinational financial services corporation. “British consumers are incredibly tech savvy and love their mobiles and using contactless. Couple that with the infrastructure and the UK offers the perfect environment. If you look at Apple Pay for instance, it’s no coincidence that it came to the UK first after its native market launch”.

The news comes as interest in the space continues to hot-up, with both HSBC and First Direct announcing their new voice biometric security tech just last week. Durham-based start-up Atom Bank, the digital-only bank, has also joined the biometric race – announcing plans to launch new tech this year.


British Business Bank and Rate Setter team-up to help SMEs

VCT schemesBritish Business Bank will now lend to small and medium-sized UK businesses. The government-owned bank has announced it will expand its lending remit, after agreeing to do so via peer-to-peer (P2P) lending platform RateSetter.

While the British Business Bank’s commercial arm, British Business Bank Investments (BBBI), has been lending to sole traders and partnerships since July 2014, is it now expanding operations to include small businesses.

The BBBI has announced it will lend at the same rates as other investors, to encourage “lending to the real economy”. The commercial arm is also working to bolster the position of alternative finance  solutions – such as P2P lending.

RateSetter, the London-based firm facilitating the new initiative, aims to provide loans to businesses within 48 hours. The scale-up, which has raised 5 fundraisings to date, has seen a significant increase in small business lending.

“In recent years banks have pulled the shutters down firmly on lending to small businesses” says Rhydian Lewis, RateSetter CEO and founder. “RateSetter is helping to reverse that trend and our books of loans to small businesses is growing strongly – business loans make up £137m of our outstanding loan book”.

He added “ we are very pleased that our partnership with British Business Bank Investments Ltd. has delivered finance for almost 1,000 creditworthy sole traders across the UK, and it is great news that this will now be extended to small businesses”.

UK firms partner-up in blockchain collaboration

Shadows of office workers entering officeThe Linux Foundation has had its numbers bolstered by two, as the London Stock Exchange Group, and Isle of Man-based Credits join the initiative.

The foundation, which includes, amongst others, ANZ Bank, Cisco, CLS, Digital Asset Holdings, Fujitsu, IBM, Intel, and Wells Fargo, aims to nurture and create an enterprise-grade, open-source ledger framework. The hope is that it will enable developers to engineer esoteric applications to support business transactions world-wide.

“Distributed ledgers are poised to transform a wide range of industries’ says Jim Zemlin, executive director at the Linux Foundation,“from banking and shipping to the Internet of Things, among others”.

“As with any early-stage, highly-complex technology that demonstrates the ability to change the way we live our lives and conduct business”, he added, “blockchain demands a cross-industry, open source collaboration to advance the technology for all”.

However, this not the first blockchain related project for either of the two companies. Credits has worked with the Isle of Man government to develop a blockchain-based registry, while the London Stock Exchange has already collaborated with a number of financial institutions to explore to possible use of blockchain.

Lloyds lend helping hand to fin-tech start-up Swave

Lloyds Banking Group has opened its doors to UK start-up Swave. The fledgling fin-tech company will benefit from the bank’s digital experts for a period of 12 weeks.

Llloyds Bank has been on a spree of-sorts recently, launching a number of digital propositions in the last few months. The bank is running in-house innovation labs to test and assess potential fin-tech products and services, with customers.

“Having supported Innovate UK’s innovation challenge” said Marc Lien, Lloyds Banking Group’s Director of innovation & digital support, “we were able to see first hand the fantastic potential that Swave’s app will provide to help encourage regular savings and people to manage their money in an easy and convenient way”.

At the end of the 12 week incubation period, Swave will hopefully launch a pilot app in preparation for its full rollout early next year.

“Being able to base ourselves right in the centre of Lloyd’s innovation team” said Swave’s Ross Tappin, “means that we can appreciate the considerations that we need to make to ensure what we’re offering not only offers a great user experience, but that also we need to think about when hiring new employees as we continue to grow”.

Barclays backs robotics

robot android women with lightIncreasing investment into robotics to the tune of £1.2bn could bring an extra £60.5bn to the UK economy within the year, according to a recent report by Barclays bank.

The Future-proofing UK Manufacturing report alleges that investing in robots would create more jobs, as opposed to fewer, with an estimated 73,000 new roles available by 2025. The manufacturing sector would also grow to £191bn by 2025 – an increase of £38bn.

“This report highlights the importance of investing in robotics and automation for manufacturers as a potential solution to the ongoing ‘productivity puzzle” says Mike Rigby, head of manufacturing at Barclays.

“By investing an additional £1.2bn in automation technologies over the next decade, the UK manufacturing sector is forecast to create an additional £60.5bn of economic output and safeguard more than 105,800 jobs through the wider economy.”

Rigby warned, however, that in order “to reap these rewards we need to address some of the barriers to investment, including the need for more user-friendly and flexible technology, addressing skill barriers within the sector, and supporting manufacturers to access the funding and information already available to them for robotics investment.”

Challenger bank Atom secures £45m investment from Spanish BBVA

close up detail of hand droping coin in piggy bank money box

Neil Woodford’s challenger bank Atom has received backing from BBVA, Spain’s second largest lender.

The Durham-based digital-only retail banking service had previously raised two rounds of finance since it was founded in July 2013 – most recently securing £25m equity investment from CF Woodford Equity Income Fund, and other Business Angels.

Now, Spain’s second largest lender BBVA has invested £45m into Atom in exchange for a 29.5% equity stake.

Set-up by Anthony Thompson, former Metro Bank chairman, and Mark Mullen, First Direct chief executive, Atom has also announced plans to launch an app.

“We’re excited by BBVA’s decision to invest in Atom, an excitement that’s about more than money” said Mullen. “Don’t get me wrong, it’s a lot of money and of course the money is important,but it’s only one of the things we need to help us build our business. BBVA has lots of banking experience and they also have access to considerable financial and material resources.”

However, Mullen suggested that Atom’s enthusiasm about the deal with BBVA stemmed from a more simple, humanist place.

“They get what we are trying to achieve here in Atom…we really like their people”.

Banks to use Bitcoin tech blockchain next year

bitcoinIn a previous insight Bit of good news: Bitcoin currency hits a 2015 high we explored how Bitcoin has steadily been gaining speed. Indeed last month news broke that the digital currency registered its highest 2015 value.

Now, however, a report carried out by TABB research claims that banks could be integrating the tech underpinning the cryptocurrency Bitcoin into elements of their organisations as early as 2016.

Bitcoin utilises blockchain technology that permits transfer of financial assets over secure, encrypted networks. This, consequently, removes the need for any third-party intermediary – thereby saving time and costs.

TABB’s report alleges that blockchain solutions could be implemented into syndicated loans as early as the second quarter of 2016.

“Blockchain’s adoption across capital markets and for a range of use cases is a matter of ‘when, not if’” the report said. “Over the next 12 to 24 months we will see early adoption grow.”

Barclays and European Investment Fund unlock £100m worth of loans for UK SMEs

Photo of businesspeople crossing the finish line

The alternative finance industry has grown at a phenomenal rate. Funding options – such as peer-to-peer lending, and crowdfunding – have in many instances displaced the traditional role of the high-street bank. In fact, eBay recently discovered that 72% of the UK’s small businesses avouched they were no longer dependent on banks. 

But now that the recession is widely accepted to be over, Banks are behaving with less caution and remerging as viable options for SMEs seeking finance.

In a new move to support SMEs, Barclays and the European Investment Fund (EIF) have agreed to provide £100m worth of loans over the next two years. The European Commission has backed the initiative, and its European Fund – launched initially to bridge the investment gap – is actively supporting the campaign.

Barclays’ head of finance, Karl Nolson, has said: “The UK economy needs innovation, and innovators need finance”. He added: “In offering Innovation Finance it enables us to provide additional funding solutions, supporting more businesses in the UK with the potential to be blue-chip companies”.

Jryki Katainen, European Commission VP, also commented: “There is a thriving start-up scene in the UK and this agreement under the Investment Plan for Europe will give those start-ups as helping hand”

We’re looking forward to see the first SMEs realise blue-chip status as a result of the agreement.

Getting funding from the banks

Getting funding from the banks is one way of funding and growing your business. Banks, like all other for-profit companies, are in the business of making money. So the main thing they look for in any company that approaches them for funding, be it a craft shop or a jet engine manufacturer, is whether that company would be able to repay its loans in full. How can you prove to a bank that you’re not going to just run away with the money or default the day after you’ve received the loan? To start with, you need to prove to the bank that your business acumen isn’t circumscribed to choosing which craft items to buy or produce; you need to have a clear idea of where the business is going, including how much money you need and precisely what you need it for. This will usually involve producing a business plan. At their best, business plans tell an engaging story about your business – whether you just have a lifestyle or you want to take over the world. Most funders will also credit score you, so make sure you have an up to date set of accounts and a trading history.

Another often ignored way of getting a bank loan… is not going to a bank. Think of it this way – banks are constantly inundated with business applications. Naturally it is very time-consuming to sift through all of them in order to find the reliable, credit-worthy companies. What’s more, they’re less willing to take the risk. So what many banks do is, instead, rely upon brokers and corporate financiers to contact the relevant bank managers on your behalf. A bank loan application that comes via a broker is far likelier to success purely because brokers only progress the applications that they are confident about, which means banks are far likelier to engage with the company and, eventually, lend money to them.

But bank debt isn’t the only option open to craft store owners looking for finance to re-kit their stores. I’ll mention three more: asset-finance, stock-finance and shopfront renewal grants. Asset finance is a form of debt that sees the lender effectively buy the asset (e.g. machinery, cars) and then lease it back to the user. So if a craft shop possessed any machinery or electronical equipment (e.g. a diamond cutter, pottery machines, or even something like a printer or a point-of-sales system) it would be possible for a lender to buy that piece of equipment but for the shop owner to use it as if it were theirs. If your business requires the purchase of stock (usually from abroad), a stock finance facility is another interesting form of finance. It’s usually quicker to access stock or asset finance, usually requiring less risk that getting a bank loan.

Finally, even if you have decided you wish to pursue the bank route to the detriment of all other routes, don’t forget about grants. Nothing tastes sweeter than a bit of free cash with hardly any strings attached! You may be surprised to hear that many local authorities offer small business grants to help shops renew their shop fronts. It’s win-win – local authorities get a nicer-looking high-street, and businesses get to make their shopfront, which is effectively their way of enticing in any casual passers-by, that bit snazzier and more appealing.

At we have a network of experienced fund raisers and advisers that can help your business seek funding, whether that be through a bank loan, stock finance, or asset finance.