Today a new business bank was launched that wants to solve the business cash flow crisis with simplicity, the power of data, and by saving British businesses £1bn a year.
Alternative financial services provider CashFlows today launched a new FSA regulated business bank. They claim to challenge traditional business banking by simplifying business cash flow, and saving companies money along the way.
The CashFlows account is said to be able to save British businesses £1bn a year, through 40 per cent lower fees and charges and a nifty one per cent interest paid on current account balances.
CashFlows are the only UK bank to have consolidated a complete range of payment solutions, their CEO Nick Ogden told Real Business. The usual electronic payment systems that most businesses need were simplified into a single account.
“The consolidation of a whole range of services decreases cost and simplifies the way that people work,” said Ogden. Apparently, it's saving money along the way. “Ordinarily, you save money because you stop doing something. But of course every business needs to continue to make and receive payment.
“What we're doing is effectively reducing the cost that [businesses] are already paying, but maintain the provision of the services they need; this is really releasing free cash flow within businesses.”
The business banking marketplace is traditionally a tough area to get into, and it has taken CashFlows three years of perseverance since the company's launch to go through all the regulation processes required to launch the account. But it comes at a time when British business and banking are at the centre of the news and political agenda – not least for Vince Cable’s pledge to provide £1bn in support to British businesses.
The Bank for Business, however, will take 18 months to get the money flowing – the CashFlows account offers the potential to open access to money immediately, so Ogden. The CEO is currently in talks with the major political parties, who seem to have started to get behind CashFlows as a viable solution to the cash flow crisis facing many businesses.
When asked what's setting them apart from more traditional bank lending to business, Ogden talks about the strength of data. CashFlows expects that the technology they are putting in place, designed to look at their clients' transactional data, will give businesses a predictive analysis on their cash flow and soon become highly useful as a tool to find the right finance solution for any individual business.
“I often hear business owners say, 'The banks don't understand what I'm talking about' – and that's probably true,” said Ogden, “but also perhaps a little bit unfair. The banks can't know the business well, because they can't see all the data. What we're trying to fix is exactly that. Thanks to the right data you can come to the conclusion of how a business is performing very quickly.”
Customers will open and manage their accounts online and through a call centre. CashFlows began by targeting SMEs and e-businesses, but have now expanded their reach to mid-market companies with a turnover of between £20m and £50m.
The company is already regulated for the whole of the EU, and looking to bring the CashFlows account into Europe throughout 2013. “We think there's some really interesting opportunities there,” said Ogden. “Banks are under more pressure in mainland Europe than in the UK – but business is widely the same.”