Explore the intricate web of myths, misunderstandings, and false information that engulf the financial sector.
All facets of the financial sector are surrounded by myths, misunderstandings, and false information. While most customers are aware of the dangers of not understanding how the complex financial sector operates, larger entities including financial institutions, organizations, and digital banking institutions are also harmed by misconceptions and misunderstandings.
In response to these misconceptions, Mark Hartley, CEO of the fintech company BankiFi for business, has started a new “myth-busting” campaign focused on digital-only neobanks and publicly refuted a number of false assertions.
In order to enable banks and other traditional financial institutions better serve small-to-medium-sized businesses (SMEs), BankiFi is a technological platform that offers a number of integrated services, including accounting, invoicing, and payments.
BankiFi is casting a spotlight on the advantages available to SMEs when they choose to deal with banks that prioritize customer-centric methods as part of these efforts to highlight difficulties faced by small-to-medium-sized firms (SMEs).
The biggest neobanking falsehoods: The three largest myths that still pervade the space, according to Hartley, are as follows:
The first fallacy is that the SME market has already been successfully taken over by digital-only banks.
Many people think that after fulfilling their Banking Competition Remedies (BCR) obligations, Monzo and Starling have both attained market shares of above 8%.
While Starling disclosed that also had 520,000 small business accounts, Monzo has publicly declared that it has more than 250,000 customers with company current accounts. It is still not obvious if these accounts are the SMEs’ primary or secondary accounts, despite these high statistics.
According to BankiFi, SMEs frequently use digital-only challenger banks and fintech solutions to enhance the offerings of larger organizations that offer both physical and digital experiences.
Ultimately, despite the BCR’s efforts to increase competition among providers of financial services to SMEs, the staying power of institutions of this kind has been significantly larger than many people anticipated, and it continues to be the place where SMEs feel safe depositing, sending, and conserving money.
The second myth: Regulation has prevented the rise of digital-only neobanks
An all-party parliamentary group in 2022 claimed that the ‘one-size-fits-all’ method of banking regulation was hindering the expansion of neobanks. Since then, the industry has seen significant instability, which has highlighted the significance of the regulator’s role in safeguarding consumer and corporate finances.
BankiFi stresses once more that the UK’s regulatory system is one of the strongest in the world and shouldn’t be compromised in order to create a more level playing field. If looser regulation puts people’s companies and livelihoods at danger, it is not the best course of action.
The third and last fallacy is that SMEs desire various things from neobanks
Despite coming in a variety of sizes and shapes, SMEs generally face the same problems. Many SMEs require banking solutions that enable them to send and receive payments in order to resolve concerns with late payments.
According to Time Finance, SMEs in the UK are owed an average of £250,000 in late payments. SMEs in the US are due $304,066 in late payments, according to QuickBooks. The difficulties presented by this situation are exacerbated by research from the JPMorgan Chase Institute, which reveals that 50% of SMEs are living with less than 15 cash buffer days.
“Giving people access to technologies that make it easier for them to get paid more quickly is one of the best approaches to manage cash flow issues. Going forward, business banking partners who engage with SMEs need to give this top emphasis, according to Hartley.