It is a real irony that when a business asks it’s Bank for financial support, and gets told “no”, and finds alternative funding, it pays the money it has raised elsewhere straight back into the Bank that said “No” so that it can use the money within its business.

Strange, but true. 

Every business requires payments to function on a daily basis. Historically these have been part of the retail banking package and as a consequence of minimal competition (92% of UK business use just 5 banks) they may serve to lock  business into relationship’s that don’t work effectively. There is a clear and logical separation between working capital, finance and loans for example and the financial mechanisms and mechanics (payments plumbing) that businesses need and use every day to transact with their customers and suppliers.

In the Review of Requirements for firms entering into, or expanding in the banking sector the whole the first annex highlights the options available as an alternative to being a bank. There may also be another message here with that of a utility style regulator as proposed in the HM Treasury consultation paper, Opening Up UK Payments. Proposed changes designed to radically improve the ability of non-banks, especially payment institutions, to compete with banks on payments may be politically timely, and appropriate, acting as a lever not only to enable competition, but as an attempt to stimulate urgent economic growth. 

So will change happen?

I believe it will, and it could happen very quickly. With numerous organisations now trying very hard to help UK businesses with lending and other financial services, an independent, regulated and neutral organisation operating the payment account infrastructure could hold the key. Sitting a “business money supermarket” on top of a neutral payments infrastructure provider enables business owners to benefit from real “financial services” choice. The ability to shop around for supportive financial services such as loans, factoring, invoice discounting, even overdrafts would then function without any fear or concern of upsetting the core inbound and outbound payments relationship that is the key to their day to day business survival.

Simples?