Brexit has happened, but now what? It’s likely going to have a major impact on many areas for businesses—one of them being online banking.
In this article, we will look at what measures are in place at present for small and medium-sized businesses (SMEs) looking to do business with EU companies after 31st January and what measures have banks taken for a no-deal Brexit.
What has changed for small businesses?
The final information is yet to be decided but the government’s website has posted some financial advisory tips for UK nationals for Brexit. The page contains key information on things like making transfers across the EU and using debit and credit cards from the UK while in the EU.
One of the main concerns for small businesses dealing with the EU is how trading (buying and selling goods and/or services) is going to be affected.
At the Paris Fintech Forum last year, one of the most discussed topics was the future of banking after Brexit, especially after a no-deal Brexit. At the time, people weren’t sure if there would be a hard Brexit, however, one of the key topics amongst the participants was how they could better prepare for it.
Banks have been preparing for the worst for the past months: A no-deal scenario. The question is, how can they offer a service in a post-Brexit Britain that includes borderless service and online banking like they have been doing until now?
Small businesses are banks’ most precious customers
Banks have taken measures to make sure the impact of Brexit is the lowest possible for customers. Small businesses are one of the most important customers for banks. The number of SMEs today in the UK account for 99.99% of the business population (around 5.9 million businesses), and they are key for the creation of jobs in the UK but also an instrumental customer group for the banking industry.
Online banking has been one of the go-to resources for small companies as it offers many advantages that are suited to a small business. These include the ease of monitoring accounts, being able to access a bank account from anywhere rather than having to waste time going to a physical branch.
But the banking landscape has been changing for the past ten years, with the arrival of the digital banks (also known as challenger banks) such as Starling Bank, Revolut and Monzo and fintech entities such as TransferWise. These banks target specific sets of financial needs and are not constrained by legacy systems, making it possible to offer a better-tailored type of product to SMEs.
Opening an office in Europe, the chosen solution
Before Brexit, British banks could operate throughout the EU block with a domestic banking license, the same as any other financial institution from the EU.
This will likely change now that Brexit has happened. And the reality is that most banks have been opening offices in Europe to prepare for this. Banks applied for licenses in EU countries ahead of the deadline and have started opening offices in key European cities, such as Dublin, Brussels, Paris or Frankfurt, to be able to continue providing services to customers that need to do business between the UK and the rest of Europe.
This will likely be a key differentiator for banks in a post-Britain Brexit: Those banks that offer easy links with the EU, will probably attract those companies that need to continue trading with the EU.
As an example, TransferWise has published a statement on its website explaining how the firm has been granted a new license to operate in Europe and has a new office in Brussels. The company also states that the operations from this separate entity will be ‘regulated by Belgian laws.’
Digital bank Revolut also released a statement via its blog just a few days before Brexit, reassuring customers and announcing that the bank has a European entity, Revolut Payments UAB, that will allow customers to continue to trade with the EU.
On its website, Starling Bank states that the bank has opened an office in Dublin to ‘enable our expansion there and to act as a springboard to our wider European expansion, starting in the Netherlands, France and Germany.’
“Businesses of all sizes have customers and suppliers spread across different countries. Our business euro account which launched in October  is already making a huge difference to these kinds of business customers, who are regularly carrying out international transactions whilst operating on a tight budget.”
Anne Boden, founder and chief executive of Starling Bank
Banks will continue to work to provide the best service after Brexit
It’s still uncertain what the final agreements of Brexit will be, and there is still a lot that needs to be defined in terms of regulation and how this will affect customers.
What is clear is that digital banks and fintech firms are aiming to make sure that they continue to provide the same service to their customers with the least possible impact.
How is this impacting your business? Tell us in the comment section below or send me a tweet to @SoniaNM55, I would love to hear from you!