I recently had the pleasure of attending a Webinar hosted by Bottomline Technologies. This webinar had the goal of diving into the findings from the recent Bottomline ‘2020 Business Payments Barometer’. This is an annual survey which tackles the issues, trends & major topics surrounding the world of small business payments. You can read that webinar report here.
Following this discussion, I was able to sit down with Ed Adshead-Grant, from Bottomline. We discussed the most valuable insights gleaned from the webinar itself, along with addressing the Covid-19 situation, and what that means for payments with the business sector.
The Key Takeaways
We began the interview by discussing both the report and the webinar. Ed shared with me that the reaction to the report had been very positive, generating a number of shares on social media, and drawing a response from some of the most senior commentators across multiple industries. For Ed, this growth is part of a natural progression “I think we’ve now established ourselves with the barometer as a strong voice of business in the payments industry […] Now it’s year five, so we’ve got some very interesting trend lines that we can look at statistically, and see what we can pick out and wave the flag for business.”
And indeed, they are showing no signs of slowing down. This year’s edition saw a record number of 800 businesses interviewed. Within the small business community, it is now clearly something that is hotly-anticipated, and used literally as a barometer for previous year’s payment action. This year was perhaps more anticipated than most, and not just because of the increased number of survey respondents. Bottomline had literally only just finished collecting data for this year’s report, when the Covid-19 outbreak hit.
As a result, Bottomline has now ended up with a report that, perhaps somewhat unintentionally, provides a snapshot of the industry in a pre Covid-19 world. And of course, Covid-19 had changed everything within this space. As Ed puts it, “Now we’ve had this black swan event, if that’s how people label it. Let’s see what barometer number six is going to say and whether there’s a real difference to the trajectory of all these concerns, from the financial decision makers in business.”
To celebrate the launch of the annual survey, Bottomline hosted a webinar featuring representatives from Lloyds Bank, the Association of Corporate Treasurers, and the Federation of Small Businesses to both serve as a deep-dive into the report’s findings, and to use it as a springboard for further discussion within the overall space.
I posed to Ed what the key takeaways he found were, from the in-depth analysis of the barometer’s data: “I think the trend lines were familiar,” he explained. “Some of them are disappointing, such as the fact that fraud still continues to be so high and in 6-figure numbers for all of the small, medium & large organisations […] and I think probably the other one that just sticks with me is the (lack of) readiness for Open Banking.”
The figure in question, is the finding that only 59% of businesses think that they are ready for Open Banking. This was a marked decrease from last year’s Barometer, which is not something you would usually expect with an evolving digital trend. Ed’s concern was that overall communication as to the benefits and innovations of Open Banking has been lacking, and thinks that “we need to make more of an effort sharing these use cases as we go forward.”
Current State of the Market
Reflecting on where Bottomline fits in, Ed said that for them it’s very much a mixed bag. They are worried about the companies that they work with, as if they cease to exist then that is clearly not good for Bottomline either, “We have that sense, I mean we need our customers to thrive […] without a healthy UK PLC, then we’re not helping them with Technology Solutions. We need them to thrive so that they are using the technology.”
On the other hand, they believe that they are a strong and robust company that is capable of handling these challenges. And, for now, there is no shortage of customers, “we’re very lucky at Bottomline, we’ve got a very robust model with a very high subscription rate, recurring revenues, so we can try and play our role in supporting the whole payments community.”
So, for them in many ways, they are taking a pragmatic and optimistic approach to this situation – there are lots of problems to solve, and they relish this challenge. “So in many ways, this is another problem, a very unexpected one, but another problem to help our user base to process their payments and to successfully retain secure processes.”
The Effects of COVID-19
Ed strikes a pragmatic, resolute, and largely positive tone with regards to how Bottomline are managing their way through the pandemic fallout. He’s well aware, however, that not every company will find themselves in such a strong position. In particular, he sought to illustrate how certain industry segments will find themselves disproportionately affected by Covid-19, “Obviously Hospitality, Restaurants, travel, they’ve been hit harder than construction that came back online. Education and health etc. have kept running and trading in payments.”
His pragmatic approach continues when it comes to discussing the future of such companies, reflecting that “some business models will be under stress. They will fail, statistically, some of the startups in the Fintech community would have been just launched and they were on kind of minimum capital injection to get up and running and there’s no customers to sign, they’re going to get folded before they even get going.”
So how does a company go about avoiding becoming another statistic, another commercial Coronavirus victim? For Ed, it’s quite clear. Companies that have already been operating on the ‘front foot’, as it were, will be much more likely to survive through lockdown & the ‘new normal’ that comes afterwards. This is because they are likely to be proactive, innovative, and ready and willing to adapt.
Crisis, the Mother of Invention?
It will be, of course, interesting to see what developments and trend-lines are noticeable when next year’s report is published. The companies that are still left standing, what do they now look like, and how have they adapted?
Crisis is, after all, the supposed ‘mother of invention’. A commonly-used analogy for the current situation is with reference to the 2008 banking crisis and subsequent economic collapse. An unexpected outcome from that period, was the creation of many of the Fintech companies that are now household names.
Of course, these were new or early-stage companies. But it’s still possible to pivot and switch up your game even if you are an established startup or small business. The contrast, Ed illustrates to me, is between those who are ‘proactive’ and those who are ‘reactive’. Understandably, Ed is of the opinion that the proactive ones are much more likely to come out of this situation, on the other side, looking far healthier.
Those who are slow to react, or who don’t react at all, will risk getting left behind, “there has to be a better way, a more resilient way, I would think, to either digitalise or work and collaborate with other fintechs in the business world and to come out of this and say that everything is the same, to me, lacks leadership […] will you lead the new way and you look for better ways of moving money and improving your visibility on where your cash is in the business?”
To be capable of this is something that requires leadership from within, and a propensity for innovation. Amongst all of this pivoting, adapting, and a basic mandatory requirement for full-scale innovation, there remains the question as to what larger trends will be borne out of all this. The one positive note to focus on is the potential rapid escalation of digital payments & Open Banking.
The Future of Open Banking
When you are talking about positive developments in the world of digital payments, you are going to find yourself soon discussing Open Banking. Now, whilst the report showed a concerning downward trend in terms of Open Banking readiness, and adoption, the actual picture may be different. This may be especially in a post-covid, ‘new normal’ world.
Indeed, Ed feels very positive about how these changes are leading to potential innovation within the part of the sector, saying that it’s “where almost coming full circle to the amount of work coming out of open banking, it’s almost like it’s it’s arrived just in time and this covid is the use case for it to get permission access to data permissioned authority to make payments on behalf.” He went on further to illustrate how it feels like everything is coming together, “a lot of these Lego bricks lined up in the industry that were coming along and it just feels like the treadmill has gone up 10km/h […] I hope that it does bear through on the next set of data and in general conversation in business payments.” It will be one of the most interesting parts of next year’s report, that is for sure.
Resilience of the Fintech Community
Ed’s final thoughts on this matter were mainly positive ones, full of optimism. He pointed out how the UK small & medium business community is resilient, and capable of thriving despite all the challenges thrown their way.
There will be a few select companies who act in a leadership role, guiding others through this crisis. Indeed, he believes that one of the strongest things in fintech is that “the UK has a very strong face in terms of fintech supporting businesses. So there is a strong community, there is a sense of helping each other. “ Indeed, you can see this through the fact that “there’s been a lot of collaborative webinars and workshops.”