Category: Finance

VISA and Amazon blame each other over high fees, whilst startups look for new ways to help merchants reduce their heavy margin pressure

Posted on by Tina Levin

With the recent news that Amazon has stopped accepting VISA credit cards in the UK amid surging cross-border interchange fees between the UK and EU, we once again witness an attempt to impose a burden on retailers by the obese card scheme providers forcing businesses to pay even more despite the unfair fees already in place. It seems like an ongoing process as no one can predict how much more online businesses should pay to satisfy the growing appetite of VISA-Mastercard credit card duopoly and other intermediary financial institutions for which the interchange fees are often accounted to be the first revenue stream, hence they aren’t happy when these rates go down. What’s more, the interchange fees can increase again at any time and anywhere as bank card associations can set their own strict guidelines on any geography, and who can tell when…

The irony is that while everyone understands the importance of SMEs as the backbone of the world’s economy, there is still no consensus on introducing a fairer and more bearable cap on transaction and other fees these companies must pay. Because it’s not just about card scheme providers and banks that charge high fees, but in addition to that, the fees imposed on smaller merchants by e-commerce platforms like Amazon are incomparably higher as for each sold product a seller pays up to 15% referral fee, for some categories even more, not counting the monthly fee paid for a selling plan and plenty of other associated costs. Some merchant platforms even generate additional revenue through inflated markups when their actual card processing costs are substantially lower. Therefore, cynical is the fact that no one wants to give up their share of the pie, but point their fingers at those who don’t either. They all seem to be trying to squeeze as much money as possible out of small businesses that are struggling to keep up, hence they have to pass down the cost to the end consumer in the form of higher prices for their products and services.

So when a giant like Amazon, whose total UK revenue in 2020 was £20.63 billion, claims it costs them dear to accept VISA credit cards, even if the price increase was only 0.3% for cross-border payments between the UK and EU, which now makes 1.5% per transaction, what then online sellers have to say, who on top of the increased processing costs must give up to 15% or more of their income to this or some other e-commerce platform offering similar services. However, this is currently the price to pay if you want to trade there and take home some of your hard-earned money.

For all the above reasons, there are startup companies that are now taking direct competition both in finance and e-commerce sectors, with the likes of VISA and Amazon, challenging status-quo position these giants have long overused by charging far more than it could have been. With the aim to offer solutions that could bypass unnecessary processing costs and sales referral fees, our own startup YAN which was founded in 2020, also pursues one simple but ambitious goal – to build a self-sustaining organisation with the sufficiently built technological infrastructure capable of supporting the full cycle of banking and e-commerce operations that will help online merchants, especially individual sellers and SMEs, accelerate their online growth by paying the lowest possible transaction and sales fees. We already created our fully in-house developed acquiring technology that will enable our merchants to sell their products and services through our multi-industry Super App and YAN.market web platform with a minimal 0% acceptance fee. We continue working on solutions enabling the payments flow through application programming interfaces that will reduce the reliance on credit cards. In addition, we have also reduced fees on internal sales or referrals to 2%, which is unprecedented.

There is a continuous sentiment in the new wave of fintech startups to challenge the existing order of requirements set by card schemes, the era of dependence on interchange fees to be one of the main sources of income for financial institutions is gradually coming to an end. Payment solutions are rapidly evolving as the boundaries expand towards the democratization of the financial landscape as more competitors enter the market, offering their own innovations combined with additional features acquired through their partners, only to be of value to their user segments. Increasing the comfort of the services provided at the lowest cost is the main customer-centric approach that motivates payment and e-commerce innovators today. It will take time to materialize the global demand on completely rethinking the financial system, while also making the e-commerce trading more inclusive and affordable for merchants, and with no doubt the startups will lead the way.

Why Customers leave banks

Posted on by Tina Levin

Here are the top 10 reasons customers leave their bank:

 

 

  1. Poor service and or dissatisfaction with the way problems are handled 
  2. Lack of service or features
  3. Dissatisfaction with the price or perceived value of banking services such as penalty fees and interest rates 
  4. Enforced switches as a result of the closure of a local branch or changes in personal circumstances such as moving home or getting a new job  
  5. A serious loss of service to customers from an IT breakdown 
  6. A dispute between a provider and a customer 
  7. A material change in banks terms and conditions 
  8. A customer’s transition from a young person to student, to an adult account 
  9. A branch is closing, closed or not local 
  10. Imminent or actual imposition of overdraft charges 

Get customer experience right!

56% of customers looking to leave say their bank hasn’t made an effort to keep them from switching.

Customers will leave within 14 months if they don’t have a good experience

The banking industry is in a state of constant change with evolving regulations, new technologies, and disruptive start-ups like ourselves. But one part of banking hasn’t changed: the need (and absolute expectation) for a great customer experience.

Qualtrics interviewed over 550 banking customers to learn what they expect in their banking experience and, what they’ll do if they don’t get it – you can read that here.

 

4 Reasons To Bank with YAN

Posted on by Tina Levin

A digital account that offers more

That’s right, everything you need in one place – from deposits to withdrawals, spending, saving, transferring, investing, insuring, grocery shopping and even travel. We’re starting with savings and current accounts and will add lending and business accounts next. 

  1. Saving you time! Opening an account is fast and secure. No long queues, no waiting.

     
  2. Giving you choice when you need it with currency exchange, digital coins, investing and trading options. Why not.  

  3. Putting you first. We will link your utility and service bills into your account – because we know that kind of stuff is useful. 

  4. Money matters. Especially in 2020 – what a year we’ve had! So, we’re offering you better rates, fewer fees and smarter services. Helping you do more with your money, 24/7 wherever you are. Plus, we’ve added important features like split bills, saving ‘pots’ and budgeting tools. 

 

YAN Launches Official Waitlist

Posted on by Tina Levin

We are super excited here at YAN HQ as we launch the official waitlist.

“Today, we are launching YANs waitlist. By using smart technology, we will show customers what is going on with their money, allow them to fully transact with their accounts, shop and sell in an easy to use single app. Our customers will feel in full control. We want to make the experience easy and convenient with value added services built around digital banking.”

Natalie Bruins. YAN. 26 August 2020

YAN is launching the first of its kind Super App to help you control and manage everything from banking to shopping in one easy to use, secure and convenient platform.

  • Save money, time, and get more control over your finances.
  • Get on the early access list and we’ll throw in a few extra perks too.
  • Be the first to know when YAN launches officially to the public.  

From our official news release:

YAN have begun onboarding their first customers to an exclusive waitlist. With its beta version soon to be released, the YAN platform will offer customers across the UK the world’s first eCommerce bank which brings together digital banking, with ecommerce and marketplace.

The single ecosystem will be delivered as a Super App and is the first of its kind offering four independent but interconnected platforms in one. Customers can enjoy shopping and discover products or services to buy online, or they can pay their utility bills with just a few clicks. There are already apps for everything financial, but who wants 5 different apps open, using up mobile data and crunching battery life? YAN promises a secure, easy, and convenient platform with multiple and sustainable revenue streams and growth potential – a current headache for both traditional and challenger banks today.

Nearly three-quarters of UK residents now do most of their banking online and since the pandemic, more consumers are shopping online than ever before. This marks an exciting time for smart banking and convenient online shopping.

“As a user, you will have all the features you would expect from a digital bank and more. As a business partner, YAN opens a new channel to market for retailers with exclusivity and lower associated costs” said Natalie Bruins, CMO for YAN.

Financial Health + Inclusion

Posted on by Tina Levin

As the global markets respond to the impact of COVID-19, we find ourselves in challenging financial times. Just 12 years after the 2008 markets signalled an impending financial crisis, we’re about to hit potentially in the deepest global recession in decades. (According to the World Bank).

In times like this, the need to maintain and improve financial health has never been more important.

What is financial health?

While there is no specific number or score that measures financial health, people with good financial health pay close attention to things like credit, debt, savings, retirement planning, and insurance. Financial health measures your ability to meet your financial needs and prepare for unexpected financial emergencies.

Financial health is fundamentally key to leading a happy and successful life. Creating a sound financial present does more than alleviate current stress – it lays the foundation for a stable and secure financial future. Poor financial health, which includes symptoms like low credit scores and little to no savings, can be bad for your physical and mental health. It can also put you and those who rely on you at risk.

Financial well-being now essential post-Covid

What impact has COVID-19 had on our financial health?
These are difficult times for everyone. The coronavirus outbreak is having a profound effect on people’s health – physical, mental, and financial.

The number of people who are anxious about their financial situation has more than doubled, from 16% before COVID-19 hit to 37%. Older generations are feeling more confident due to less debt and their reliance on pensions, while Millennials and younger adults, people with dependent children, and those who have been laid off are worrying more about their financial future.

Mullen Lowe Profero published research (August 2020) focusing on two communities who have been hardest hit this year: 18-25-year olds and small businesses. The survey finds the ability to absorb financial shock the critical worry affecting wellbeing and 40% of 18-25-year-olds are sometimes afraid to look at their bank account.

Other interesting findings include:

Over two-thirds of respondents are now demanding financial education to find peace of mind

40% of 18-25-year-olds say that thinking about their money has a negative impact on their wellbeing

The research highlights the 60% of the audience feel banks should help them have the capacity to absorb a financial shock.

More than half of 18-25 year olds agree that a bank’s role is now to: provide education on money management, help them keep on top of financial goals and help them save enough money to cope with the ups and downs of life

Finally, another push for a larger focus on financial inclusion

Financial inclusion is a key driver in tackling poverty and boosting economic growth. Yet a staggering two billion adults across the world still do not regularly use a bank account or have access to a financial institution via a mobile device.

Today, around 13 million of the lowest-income individuals in the UK – around 20 per cent of the population – are financially excluded by mainstream banks and lenders, who use traditional credit scores to assess creditworthiness, an approach typically unsuitable for these individuals.

Financial inclusion means ensuring access to bank accounts to everyone who needs one – including people with no permanent address. The move towards a cashless society is accelerating apace, but those without access to mainstream banking risk being left further behind. And financial inclusion also means not paying extra to access the same financial services as wealthier people.

Why aren’t banks serving these customers today? The most common reasons include:

  • Lack of or inadequate education
  • No valid identification
  • Geographic challenges
  • Financial products too expensive
  • No credit history

What can we do here at YAN?

While these barriers can be significant, at YAN Bank, we believe technology now provides the means to overcome many of these challenges and will form a core component as we build our infrastructure today and in the future.

Through our products and services, we aim to considerably reducing costs (commissions) compared to traditional players by cutting out manual tasks and intermediate players through technology. Typical examples here are remittances (money transfers) and peer-to-peer lending.

As part of our business model, YAN will be leveraging e-commerce data for financial inclusion

YAN Bank will launch a YAN Money-101 series in an easy to use, accessible and jargon free format to help our customers get the most from their money.

Through tapping into digital ecosystems and smart technology, YAN are building an accessible Fusion Bank. To find out more, visit www.yanbank.co.uk

Tech enabling happy customers

Posted on by Tina Levin

Over the last 10 years, banks have faced the fallout from the global financial crisis, regulatory reforms, the birth of new competitors, and now a global pandemic. The speed that modern technology has developed has meant that the traditionally slow-moving financial institutions have had to invest billions to remain relevant to customers, and competitive in the marketplace.

Old fashioned banks, no thanks.
Customers’ lifestyle habits are increasingly motivated and directed by the speed and simplicity of online services; the same is true of how they want to bank.

Customers expect convenience, security, and personalisation – and that demands a far more agile, personal approach to banking. Consumers’ growing desire to access financial services from digital channels has led to a surge in new banking technologies that are reconceptualizing the entire retail banking market.

Better customer service? Then tech is essential…

Perhaps the biggest way that FinTech is disrupting the finance and banking sector is through customer service. Remember when banking was tiring and slow… you had to stand in lots of queues, file lots of paperwork and be physically present!

In a recent Qualtrics survey (*1) of more than 550 banking customers, poor service and poor financial advice emerged as top reasons why people leave their banks. 

69% of customers surveyed listed poor services as the primary reason for leaving, with 56% indicating the bank could have changed their mind if any attempt had been made to salvage the relationship.

What are the tech options available to support better customer service?

Self Service
Despite it being a clear competitive differentiation, the financial services industry has been slower than others to implement self-service capabilities and best practices. As a result, many institutions are missing out on valuable opportunities to reduce call centre volume, provide 24/7 support, and improve overall customer service in banking.

Consumer self-service has become a growing trend, with 74% of customers reporting that they have used a self-service support portal in the past; another 81% reported that they’ve attempted to resolve issues on their own before contacting a live service representative. (*2)

Be contactable. Whenever the customers wants.

Live Chat
Customers expect timely and flexible support. Through virtual banking, you can offer a live chat conversation, which can be transformed into a video chat in mere seconds by clicking a URL provided by a consultant. When no advisor is available, customers can use a chatbot to find answers for many typical questions quickly.

Chatbots
Chatbots are rapidly become the norm for customers to interact with. AI enabled chatbots can help customers with a variety of tasks from engaging to interacting with customers 24/7 – breaking down the idea of traditional banking hours. Customers are becoming increasingly comfortable conversing with chatbots for a variety of things making this a logical next step for the bank to invest in. 

Artificial Intelligence (AI)
The financial customer experience of the future will be significantly affected by AI. This will be most notable through the delivery of mass personalisation and assisting customers as they overcome low levels of financial literacy.

AI is today being used for the daily challenges faced by many businesses like CX, loyalty building, anomaly detection and fraud prevention. Here are some scenarios for AI use cases in banking: Location intelligence, Query routing, Biometric authentication, Natural language generation (NLG), Behavioural biometrics, ID verification, KYC and AML, Sentiment analysis, Customer lifetime value modelling and Call centre agent matching

Technology is the enabler that makes it easier and frictionless for the customer which in turn creates substantial competitive advantage. Yan Bank are challenging the universal banking model with their lower costs, personalized insights, predictive intelligence, user-friendly interfaces, easy accessibility, and simplified processes. Through tapping into digital ecosystems and smart technology, YAN are building an accessible Fusion Bank.

References

(*1) Hitachi Solutions https://global.hitachi-solutions.com/blog/how-to-improve-customer-service-in-banks

(*2) http://info.microsoft.com/rs/157-GQE-382/images/EN-CNTNT-Report-DynService-2017-global-state-customer-service-en-au.pdf

Say Hello to YAN!

Posted on by Tina Levin

UK eCommerce Bank Start-Up
YAN To Launch in October 2020

YAN, a UK digital banking start-up which calls itself the world’s “first e-commerce bank”, is set to launch its beta by October in the UK.

The fintech intends to merge financial and banking infrastructure with e-commerce, hoping to become “the next Amazon in finance”.

YAN will make its money from the companies which join its marketplace. Founder and CEO, Davit Satyan, tells FinTech Futures that the start-up aims to be a “super app”, in which users can shop and pay with the fintech’s various e-commerce marketplace partners – none of which have been disclosed so far.

“Many challenger banks’ revenue streams are based on overdraft fees, and they rely heavily on investment funding, but we will work like Amazon or eBay,” says Satyan. “We want to become the first financial institution associated with this term [e-commerce bank].”

YAN will make its money from the companies which join its marketplace and feature their products, as well as from fees coming from its core banking offering, and its own financial products. It promises to donate “at least” 10% of its revenue to charity, as well as invest in in science, education and technology.

But it will also offer business and personal current accounts, savings accounts, loans, insurance, and credit cards, whilst also allowing users to transfer funds both domestically and abroad, and store multiple currencies – including cryptocurrency and the start-up’s own YanMoney digital currency.

The start-up’s digital currency exchange will allow users to send money cross-border without establishing multiple bank accounts, whilst YANMoney can be used to spend in the app’s marketplace.

The worlds of ecommerce and banking have already begun to collide. Last month, Canadian ecommerce giant Shopify launched its no-fee banking account for independent merchants, Shopify Balance, set to roll out later this year in the US.

Whilst Shopify focuses more on the merchant experience, UK fintech start-up Zeux launched an in-app Amazon shopping feature in April which is more akin to YAN’s consumer focus. All in-app purchases earn 2% cashback for Zeux users, which is a feature YAN will be able to explore in its own marketplace.

Looking to tap the same consumer pools Monzo, Monese, and Revolut already tap, YAN already has a development team together from the likes of IBM and Ericson which are working on a mixture of in-house technology and third-party integrations.

As for a banking licence, Satyan says: “We will still be able to launch most of our services and products under e-money licence which can be obtained much quicker, but will apply for the full banking charter as soon as possible.”

Along with preparing for its first institutional investment round, the start-up is currently planning an equity crowdfund, but Satyan says he is conscious of Monzo’s recent dive in valuation and so in the current climate the YAN is yet to put a target on its fundraise.