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STARTING GLOBAL: WHY INTERNATIONAL BUSINESS PRESENCE IS THE KEY TO POST BREXIT SUCCESS

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Will Marwick, CEO of IFX Payments

 

As the clocks turned 2020 into 2021 the UK left the European Union after 47 years.  The decision divided the country, and businesses were forced to adapt to – and comply with new regulations.  Certain industries were clearly more affected than others, and businesses which had some sort of international presence benefited from a smoother transitioning period.

Players in the payments industry were perhaps one of those lucky ones, due to the nature of international capabilities inherent in the sector and its continued ability to stay agile.

A key consideration and a massive point of debate was whether London would remain the centre of the financial services sector, and if not, what would the repercussions be for businesses.

For the payments sector, while the UK’s Financial Conduct Authority (FCA) has instituted a Temporary Permissions Regime (TPR) enabling registered European payments firms to continue operating in the UK without relicensing through 2024, the European Central Bank (ECB) has been more robust, spreading a sense of uncertainty across the board.

It wasn’t just new regulations which threw many businesses, but the issue of successfully managing and retaining an international workforce.  As companies were forced to adapt, the financial industry saw the underdogs leading the charge, as smaller firms proved to be more agile and resilient to the ever changing Brexit landscape.

 

Friend or foe? Brexit and the payments industry 

Before Brexit, the payments sector was seamless, cross-border and collaborative.  Like many industries, it was easy to access multiple markets as trading wasn’t so limited.  In the past seven months, the imposed regulatory changes have made everything more challenging and forced the industry to focus on digitalising its offering and cementing its international capabilities in order to stay competitive and futureproof itself.

But the initial stages were far from easy, and in the early months of Brexit, many industry players reported of IBAN discrimination being a major issue as a number of companies across Europe began to refuse Euro account bank details if they contained the country code ‘GB’.

As a result of Brexit, sending a payment to Eurozone countries resulted in additional charges. Whilst the fee is nominal, it means that payments can be short of the required full amount being sent.  This new imposed fee has caused an unnecessary amount of disruption and operations teams have been tasked with managing flows into different accounts to mitigate unforeseen costs arising.

 

Starting Global, Thriving Global 

In a bid to mitigate the impact of Brexit and futureproof our growth, we knew early on that our international capabilities would help us navigate this challenging time. As a bespoke payments and FX technology platform, we were programmed to integrate seamlessly with global data fields across multiple banking partners. We also know which global industries benefit from our digital cash management system and how we can take that into new markets – so really the missing piece is local permissions to enter new jurisdictions.  It was therefore a no-brainer for us to really focus on bringing our pre-established international operations to the forefront and help the teams mitigate any disruption.

Brexit has not changed the need for cross border payments, rather only the operational functionality and regulatory requirements.   Having established experts in multiple fields reduces the time spent by management members imposing new legislations and regulations – many of which are interpreted at each local regulator’s absolute discretion.

 

Tips to help your business guarantee the best international move post-Brexit: 

1. Consider timing. When considering whether expanding internationally is the right move, you should always consider if now is the right time. Ask yourself ‘should the business grow internationally?’.  If ‘yes’ the follow ups in tandem are ‘when’ and ‘how’. ‘When’ is predominantly driven by market forces, whereas ‘how’ might be driven by local legalities (wholly owned subsidiary vs joint venture with locals).

 

2. Watch out for pain points.When expanding to new markets, it’s important to identify industry pain points when it comes to payments and remittance. From my experience in running an FX brokerage it’s easy to get drawn to currency and mitigating the exposure firms have to shifts in the FX market. But our ibanq product can do much more than help – it can be a virtual cash management system to compliment open banking permissions with its instant receipt notifications, and it can also act as a reconciliation tool for businesses with multiple client accounts and correspondent banking infrastructure.  Once you identify the pain points of firms operating within a given industry, new markets identify themselves.

 

3. Do your homework. Understanding your formal institutions (political, economic, legal, regulatory, financial etc) and the informal institutions (culture, religion, language etc) is of paramount importance. Coupled with your local market research, you need to understand how your business, or a version of your business, interacts with each of these considerations.

 

4. Foster a culture of unity. When teams are spread across multiple nations, it can be difficult to keep an international workforce blended and united in a common goal.  In order to make it work for everyone, having a clear company strategy is paramount.  Mission statements are useful tools in helping guide all forms of decision making throughout the group and across different countries. If you have a clear message internally, you can trust people to make considered decisions in pursuit of achieving that message.

 

Business

OUTSOURCING YOUR IT SOLUTIONS CAN SAVE YOU FROM COSTLY DOWNTIME

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Amir Hashmi, CEO and Founder of leading IT and Cloud services provider Zsah, discusses why you need full-time professionals if you want to avoid the money pits of IT downtime

 

A lot of wealthy business owners will uphold the following infamous statement – time is money. Many CEOs believe that it should be at the heart of your business strategy. They aren’t wrong, and it is no different when it comes to IT. Therefore, it is high-time that businesses consider the real risks and costs associated with IT downtime, and do all they can to avoid it

In the midst of a post-pandemic technological revolution, it’s now more important than ever to carefully consider who manages your technology. It is essentially the motor that drives productivity, efficiency and growth, and if therefore, if there isn’t a thorough and dedicated system in place, businesses risk system failure, which can risk everything.

Something so essential to a company deserves to be taken more seriously than just to deploy the services of an IT help desk when there’s a significant issue. The answer isn’t necessarily to consider ways in which you can fix a problem once it arises, but instead to ponder upon ways of preventing an issue from occurring in the first place. This is what leads us to managed IT support services: your personal, dedicated team of IT experts that not only fix issues when they occur, but that also constantly improve the software and hardware so there is less chance they ever take place.

 

The real cost of downtime

Whenever your IT isn’t functioning at its full capability, you are losing money. Even the shortest of gaps in service can severely impact the customers’ experience, your reputation, and the output and efficiency of your entire staff.

In 2017, ITIC sent out an independent survey to measure downtime costs. It found that 98% of organisations say that a single hour of downtime costs over USD $100,000, with 81% putting the figure at over $300,000. For 33% of businesses, 60 minutes of downtime would cost their firms between $1 million and £5 million.

Figures from Statista.com reveal 24% of organisations worldwide reporting average hourly downtime costs amounting to between USD 301,000 and USD 400,000, with 14% reporting greater than USD 5 million in costs.

Elsewhere, IHS Markit surveyed 400 companies and found downtime was costing them a collective USD 700 billion per year – 78% of which was from lost employee productivity during outages.

 

Managed IT solutions are the key

Though we may never know the full cost of downtime, it is evident that it costs individuals and businesses a large amount of money. Don’t wait until your next emergency to remedy a problem; get the professionals in now to prepare for the future, rather than just fix problems in the present.

When you work with a managed technology services provider, your network and infrastructure are supervised 24 hours a day, all year round. As with any IT service, this means that issues will be fixed – however the real advantage is more long-term. As technology service providers perform regular proactive upkeep, there will be a reduced chance of suffering from issues in the first instance, and when (or if) they do occur, it will be far simpler to recover data thanks to full cloud integration.

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HOW TRADITIONAL INSURERS CAN USE TECHNOLOGY TO IMPROVE THEIR RELATIONSHIP WITH CUSTOMERS

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The customer experience with insurance is anomalous, in that one is only required to engage with their insurer if things are going wrong for them. To add value to the relationship, new technology and methods should be adopted, in turn driving loyalty and business growth, writes Oliver Werneyer, CEO and Co-founder of Imburse

Oliver Werneyer

Insurance is one of the oldest industries in the world and it is still, to this day, considered a grudge purchase. Looking back, insurance has a history of having a challenging relationship with its customers. According to an IBM study, in 2008, only 39% of consumers trusted the insurance industry. This percentage has stayed largely similar over the years, having reached only 42% in 2020. For any business with growth ambitions, good customer relationships are crucial.

I believe that now more than ever, the insurance industry not only needs to continue investing in improving relationships with customers, but to really think about new ways of doing so. At a basic level, the moment of truth for an insurance customer is when either they need to pay or are getting paid. Insurers can have the best policy wording, quick claims processes, apps and advisors, but if the experience to pay premiums or to receive a claim is bad, the customer immediately loses trust.

The pandemic has exposed this tenuous relationship between insurers and its customers. The need to move everything online and provide personalised services has exposed significant shortcomings in the service insurers provide. The industry has been too slow to adopt newer technologies and move engagements closer to the customer (self-service and empowered). This is largely due to the legacy systems and processes that insurers failed to modernise over previous years.

This means that the better-positioned incumbents have stronger customer relationships and benefit disproportionately from the pandemic, as they are able to win more new customers and convert customers from other insurers. They also benefit from significantly lower customer acquisition costs and much better growth, as illustrated in this McKinsey report. Even new entrants or InsurTechs are benefitting massively by focusing on improved customer experience and customer relationships.

However, it is never too late for insurers to build better relationships with customers. The main way to build a good relationship with a client is to make life easier, live up to promises and add value through the relationship with them. By working on these key elements, insurers can start building strong relationships with their customers, and, through the right partners, deliver this in a timely and non-disruptive manner.

 

Embedded Services

Insurance products often get a bad reputation because they cost money, but the benefits might only come much later, or never. Customers don’t get to experience a positive relationship with insurance products, either because they never claim and feel like they lost out, or they claim and they’re in a bad situation. By either embedding other services into the insurance experience to deliver a more transactional engagement, or embedding insurance products into general customer experiences such as online shopping or rewards, insurers can enrich customer relationships to generate value.

This way, insurers become a value-adding part of the customers’ everyday activities and not just a product that they have to pay for and may never get anything back from. One example is to embed micro-savings capabilities, often found in banking, into pension savings and insurance products. This can allow customers to save more for pension, attract younger customers and build a portfolio of fiscally disciplined customers.

 

Tailored journeys and personalisation

Customers have come to expect personalised journeys and engagements from product providers. Streaming services, social media, e-commerce or mobility services have shaped the customer expectations. Now, customers are also expecting personalisation for insurers.

Insurers need to invest very heavily in delivering personalisation and customisation to customers as they engage with their products. Failure to deliver this puts renewed strain on the value perceived by the customer and their relationship with the insurer. This applies not only to customer interfaces, but to aspects such as payments. Insurers should make it easy and pleasant for customers to pay and get paid. As the main moment of truth, payment experiences need to work optimally.

 

Perceived customer value metrics and delivery

The value customers derive from insurance products is, generally, monetary. Therefore, insurers must invest in product enhancement to increase its perceived value. Perceived value is not tied to a monetary value. By being able to choose between multiple payment options, such as a $300 pay-out to a bank account or a $320 Amazon voucher, the customer has a higher perceived value of the payment. This can be achieved by leveraging non-insurance products that can be purchased at a discounted price, exclusive access that the customer would otherwise not have or conversion into a form that is more useful to the customer.

Payments, for collection and pay-out, are at the core of delivering this value. An excellent payment experience immediately influences the customer to be positively inclined toward a product (PwC report). In order to offer this, insurers need to leverage multiple technologies and providers, offer any speed of transaction in any market, and deliver faster automation and better risk control. The key is to transform insurance products into transactional value-adds to customers’ lives and use this opportunity to continuously build on relationships with customers.

The main roadblock for insurers is still the operational implications of these activities and the costs that arise. In looking to build a better customer relationship, insurers need to look at partners that are operational enablers to deliver this. Partners that can solve the integration and speed-to-market problem so that insurers are enabled to deliver new capabilities, not bombard them with new ideas and no path to delivery.

Imburse, for instance, enables insurers to access all the global payment providers and technologies available in any market. Through a single connection, insurers can deploy any payment capability into any channel, for collection and pay-outs, without ever again needing to build a direct operational integration to the providers. This gives them full freedom to leverage payments as a key value driver and customer experience enhancer.

Building a better relationship with insurance customers is key for the insurance industry to close the protection gap. Incumbents are in the prime position to look at Insurtech and Fintech partners to rapidly and significantly modernise, digitalise and transform their own capabilities to deliver major enhanced value to their customers.

Imburse is an advanced universal payment connector that enables businesses to gain cost-effective access to complete global payments technology, regardless of the service provider. To learn more, please visit www.imbursepayments.com.

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