Each week, The Fintech Times takes a look at some of the latest stories in UK fintech. This week, 1 in 10 BNPL users chased by debt collectors, UK borrowers are 31% more likely to open an account digitally than in 2020 and 70% of businesses across the UK have accelerated their digital transformation due to COVID-19
Wombat offers UK investors access to global battery market
Micro-investing platform Wombat is offering investors the opportunity to plug into the booming battery market with the launch of its latest theme-based ETF. ‘The Battery Boom’ fund offers exposure to companies capitalising on the growth in the adoption of battery and energy storage solutions. It now has more than 160,000 users and 15% month-on-month user growth.
Kane Harrison, CEO and co-founder of Wombat, comments: “As concerns about climate change continue to mount attention is increasingly turning to the technologies that can help reduce carbon emissions from high polluting activities like road transportation and power production.
“With battery technology improving all the time, its importance can’t be overstated, and we are delighted to offer a thematic fund that provides investors access to the companies that have the highest potential for growth in what is an exciting emerging global megatrend.”
1 in 10 BNPL users chased by debt collectors
New research released today by Citizens Advice found that one in 10 buy now pay later shoppers have been chased by debt collectors, with that number rising to one in 8 for those aged 18-24.
The findings come following rising concerns about how Buy Now, Pay Later (BNPL) schemes such as Klarna, Clearpay and Laybuy could be tempting young shoppers into taking on unsustainable levels of debt.
James Andrews, senior personal finance editor at money.co.uk, said: “Despite Buy Now Pay Later schemes giving consumers a quick payment option, they are also a potential entry point into a world of damaging debt. And in some age groups, with one in eight young shoppers having their debt passed on to debt collectors, it’s clear that the level of spending facilitated by these firms is completely unsustainable.
“Our own research shows that BNPL providers’ youthful marketing appeal and use of social media influencers, continues to encourage shoppers to sign up and potentially spend more than they can realistically afford. “As with any form of debt, it’s important to fully understand the risks associated before committing yourself to any kind of contract or agreement. A failure to do so could easily spiral into a cycle of debt you cannot get out of.
UK SME retailers pivot with digital services for long-term recovery
Research from Opayo indicates that most SMEs have permanently transformed the way they interact with their customers, with 9 out of 10 introducing new digital services. Additionally, four out of five (82%) businesses say that retailers without an online presence are unlikely to survive in the future.
The research also shows UK SMEs are offering new services such as establishing an online shop (67%); home delivery options (62%); or click and collect capabilities (35%). Additionally, 77% of SMEs now sell directly to consumers via social media platforms such as Facebook, TikTok or Instagram, compared to just 41% before the pandemic.
Sean Wilson, Managing Director, at Opayo said: “Our research highlights that it’s not solely larger companies focusing on digital growth. SMEs pivoted during the pandemic by shifting their focus to eCommerce, social media channels and home delivery services to generate sales and loyalty. While a physical presence remains important for many retailers, SMEs are successfully combining in-store and online sales channels and payment options to be more customer-centric and for long-term resilience.”
UK Borrowers 31% More Likely to Open Account Digitally Than in 2020
A new study in the UK by analytics software firm FICO shows that UK consumers today are 31% more likely to open an account digitally than a year ago. However, the surprising outliers in the rush to digital-first account opening are Generation Z (Gen Z). Financial education is key as it appears that digital savviness is not enough to counter the need for in-person help and advice when selecting banking providers.
However, while some members of Generation Z (Gen Z) are eager to use a bank’s app to create an account, most prefer to open accounts offline. When asked about their preferences for opening a current account, just 13% of Gen Z said they would use a bank’s website, compared to 43% of respondents across all age groups. Gen Z showed a greater appetite than other age cohorts for opening an account in a branch, over the telephone, and through the post.
“While it may come as surprise to many to see Gen Z more interested in face-to-face account opening than older age groups, this is not so unexpected when you consider that they have had little experience in using financial services and help and advice that is personal to them is harder to access in digital channels,” said Cox. “Banks that can find a compelling way to offer highly personalised, financial advice to younger people within digital channels could gain a competitive advantage.”
UK CFOs believe their role has become more complex during Covid-19
97% of UK CFOs believe their role has become more complex during the last two years, a survey from global payables automation company Tipalti Europe has revealed. The poll highlights the increasing pressures and responsibilities placed on the finance leader today, and the greater collaboration needed with the c-suite.
A fifth (20%) of UK CFOs say they’ve seen a greater demand placed on them by the CEO and board in the wake of the uncertainty of both Covid-19 and Brexit – a key factor that has made their job more complex. In addition to this, over a third (39%) believe collaboration with the CEO and other members of the c-suite has become more necessary than before to the office of the CFO.
Rob Israch, General Manager of Tipalti Europe said: “Our research shows the increasing amount of responsibilities placed on the modern CFO. In order to see success with initiatives like sustainability, international growth and digital transformation, which we know are key priorities for businesses in the UK, it is essential for finance departments to adopt technology that removes manual labour, so CFOs can focus on what matters. Only then will CFOs be able to focus on strategic initiatives that see business success.”
70% of businesses across the UK have accelerated their digital transformation due to COVID-19
The pandemic has sparked a tidal wave of digital transformation, with 70% of businesses across the UK and mainland Europe accelerating digital upgrades as insurance against future crises.
Three quarters (74%) of businesses say technology was pivotal to their survival during the pandemic, ensuring business continuity and allowing the rapid shift to home working. However, these changes have presented a number of new challenges, with 30% say they have faced an increased security risk due to the greater number and mobility of devices and 25% admit to having lost track of devices assigned to remote workers.
Many businesses failing to focus on cash flow
New research has shown that just 14% of UK Finance decision-makers focused on cash flow during the most recent Covid-19 lockdown. The majority of businesses focussed on cost-cutting exercises and the use of Government support. For example, 41% confirmed they had furloughed accounts payable staff over the past 12 months.
As of June 2021, approximately 11.6 million jobs had been placed on furlough in the United Kingdom as part of the government’s job retention scheme at a cost of around £100 billion.
Ian Smith, GM and Finance Director for document management provider Invu, the company that commissioned the research, argues that cash is the key metric in a crisis.
“Cost-cutting is a key component in cash management but failing to pay attention to current and future cash flow both entering and coming out of a crisis can be terminal for a business.”
“Surviving this cycle is dependent on having full visibility of working capital commitments which places a high reliance on timely and accurate management accounts and visibility of future financial commitments.”