Digital banking, tax and accounting: Likely winners and losers

Digital banking
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In a fast-moving and crowded market, who is best placed to provide digital business solutions to SMEs?

While there are likely to be multiple winners and losers in the race to digital, accountants are well positioned to continue to provide their clients with advice they trust on solutions appropriate for their businesses.

One organisation that has been part of the digital banking revolution from the ground upwards is Cashplus. The UK-based banking services provider has been in the in business for 14 years and has seen the market evolve beyond recognition in that time.

AccountingWEB spoke with Andrew Fanner, digital delivery director at Cashplus to find out about the opportunities presented by this rapidly evolving environment and how accountants can benefit from them.

As we move into the new environment of digital, open banking, MTD, etc., who is best placed to provide digital business solutions to SMEs? Is it accountants, software providers, banks or independent aggregators?

So far, the biggest digitisation has come from the big accounting software providers, and they've done it through a combination of providing brand value, introducing marketplaces for additional services and more recently by connecting with HMRC. They also enable providers of financial services to integrate to their platforms, and that combination has strengthened their relationships with the end customer. 

However, we have also seen that no single channel has a stranglehold on the market. In spite of their success, accounting software providers continue to depend on accountants. And that comes down to the perceived trust business customers have when speaking to a person, rather than letting an automated solution make all decisions for them.

As individuals, customers always need to know that the person pressing the button understands their requirements and knows what they are doing. Digital banking providers like us and independent aggregators need to remember that. 

Will business customers increasingly look to consolidate their banking, accounting, software and financing solutions into one in the future?

In terms of the consolidation, Making Tax Digital is the most significant step so far in this journey of bringing banking and accounting services closer. But we expect to see further changes, as key players better understand customer demand for enhanced propositions and greater levels of automation.

Central to this is the concern that businesses have around HMRC and compliance. This is an area where the accountant, as a trusted adviser to business, will continue to play an important role.

Businesses will increasingly expect accountants to educate them in what the automated solutions can deliver business improvements, whilst still ensuring that they are providing the professional reassurance their clients are looking for. 

Who will be the winners and losers in the future? Who will own the customer?

I recently spoke in an accounting conference in relation to this and there was a mixed view. But ultimately the accountants in the room backed themselves as being the ultimate winner and not losers in that value chain!

I think it's quite possible that there are multiple roles to be played. But whoever you are – the accountant, the software provider or a banking service provider like us – you need to make sure you are focusing on the needs of the customers and on why they are coming to you in the first place.

Going back to the fact that no one channel has a stranglehold of the market, there are always going to be different needs for different customers. And so long as providers can provide that focus, then ultimately there are still a lot of winners to be found. 

As competition in SME banking increases massively it’s going to be difficult for businesses to make decisions on who to use.  What advice would you give and what will be the key factors?

Despite the increase in the number of SME banking options available that we are currently seeing, eventually we will see a period of consolidation in the banking space. Therefore, it’s important that businesses choose their providers carefully. 

We are going to see that change, just as we've seen the consumer banking space change very rapidly, with more new entrants in the last three to four years than in the previous 30 years. I think if we give it another 18 months, we will be at the same stage in the SME market. 

It’s important for businesses to make sure they choose sustainable business partners. One way of ensuring that is by looking at the people you trust within the sector – the accountants and the accounting software providers are potentially some of those – who they partner with, who have established themselves within the market and who understand the customer needs within the SME banking and accounting space. 

The changes we are seeing are going to be positive for the SME market as a whole. The increased level of competition will ensure that pricing is competitive. But it’s also important to not get distracted by the first shiny new toy that some of the banks are offering and to pick a service that is both relevant for you and will be there for the long term.

Cashplus is one of the players operating in increasingly crowded digital challenger banking space. What makes it different from the others out there?

Cashplus is slightly unique in the challenger space because we have been around for about 14 years, which means we don’t suffer all the legacy challenges of the older high street banks but are more established and proven than many of the new challengers. We’ve opened more than 120,000 Business Current Accounts and partner with hundreds of firms of accountants. As a result, we understand the market and what the businesses want from it. This allows us to tailor our services to what our customers need and to ensure we add value. 

How important to Cashplus are accountants and accounting software providers?

We've been working with both accountants and accounting software providers pretty much since we established our SME product. They are some of our key partners, both from an acquisition perspective and an existing customer perspective, and they are often the voice that delivers the message that we want to get across. They help determine our product development priorities.

Through our engagement with accountants, we enable their customers to open new business current accounts within minutes, provide prepaid expense card solutions to their staff and save money on their payroll payments.

In terms of how people trust us and how we are perceived, it's very important for us to maintain this relationship to ensure we are coming across how we want to and are able to deliver a successful product. 

For our customers, one of the key things is choice. Some people want to manage their account themselves; others want an accountant; others want their accountant to manage it for them and sometimes they just want to integrate directly to an accounting software provider. Our accountant partnerships allow us to offer customers this choice. 

 

Cashplus is especially proud to sponsor the Accounting Excellence New Firm of the Year Award. We understand the importance and challenges for accountants in supporting small businesses and welcome every opportunity to help innovative new firms excel.

Accountants interested in partnering with Cashplus for SME business banking services can contact us on [email protected] or https://www.cashplus.com/accountants

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Contributions from the AccountingWEB.co.uk editorial team.