Fintech Insider Podcast by 11:FS
00:03:59 · Valentina Kristensen, Sarah Kocianski, Ross Gallagher, Pranav Sood
[00:03:59] S3: I mean, I think, you know, it's... If you think about what they said yesterday in the budget. Right? So with Thursday today, the budget was yesterday. As you say, Russ, it's sort of evolving every single day, so who knows where it'll be by by Monday when when the show comes out. But, I mean, I think if you look at, you know, what they said, so, you know, you... If you if you think you've got coronavirus, you're working in retail or leisure, which there's not really an option to sort of work from home. You know, you have to go on to statutory sick pay, is £94.25 a week, right? Which you can't really pay a mortgage on that in in most cases, I imagine. So, you know, there's also a need to kind of recognize that and then sort of address that on on that side. On the SME side, I mean, look, I think, again, yesterday, the the chancellor laid out a number of really good initiatives to to support small businesses, everything from sort of business rates, freezing, you know, the tax on all of the wonderful alcohol we're drinking. And Why [00:04:55] S1: does that affect SMEs? [00:04:56] S3: Well, so if you think about, like, you know, small businesses like pubs and things like that, I mean I mean, I guess people would be more inclined to go to the pub now, you know. I just [00:05:04] S0: don't know if that's the the behavior we're trying to encourage at the moment, is it? [00:05:07] S1: On on a... Sorry. [00:05:08] S2: Was gonna say there's actually a special relief for small pubs that he announced yesterday as [00:05:11] S3: well. That is... Yeah. True. That's From one
00:05:11 · Valentina Kristensen, Pranav Sood, Sarah Kocianski, Ross Gallagher
[00:05:11] S3: well. That is... Yeah. True. That's From one [00:05:13] S2: of of the... One of the many highlights of the budget that we [00:05:16] S1: had to call out. Ignore the fact they did a fintech... They announced a fintech review. We're all focusing on the alcohol in the pubs. That's what's important right now, people. [00:05:22] S0: Welcome to fintech... [00:05:23] S3: And the embossagement of the the tampon tax finally. That that was great, as well. Not not necessarily affecting SMEs. But, but then also, obviously, the the the sort of, emergency coronavirus, loan scheme, so kind of loans up to about 1,250,000 to cover working capital, another 200,000,000 to the British Business Bank to support scale ups. I think the kind of key thing here is just making sure that these processes come into effect, you know, well, because if it's sort of weeks and weeks until they they actually have a proper process aligned for how banks can actually benefit from these things and how they can then start implementing them to do loans, then by that point, you know, coronavirus could have kind of come and gone and and the damage has been done. So really, really important that these things come into effect as quickly as possible.
00:06:10 · Pranav Sood, Ross Gallagher
[00:06:10] S2: Sorry, I was gonna say, think in ordinary circumstances, SMBs live on the edge. I think every year roughly 50,000 go bust just because of late payments. I think I saw a number that said around 50 of small businesses are cash flow positive every month in a normal year. And having a shock like this impacts them in so many ways. The revenue hit, the productivity hit, the costs Val was talking about as well, sick leave, parental leave, all these things that you don't factor in. And going back to the actual story, I think it's fantastic to see the banks taking some action. But I think Val's point is really the salient one which is it needs to happen fast because rate cuts and all the stuff that you do at the economy wide level, it takes time to filter down and I think that's not really what small businesses have got right now and so [00:06:55] S0: Well, I think my worry on that is that, you know, what we've seen in terms of the rate cut and the types of measures that we've just described, I don't necessarily think that they're going to have the impact in terms of shaping behavior in the short term because people are panicked, it goes back to Sarah's original point around anxiety, and people are going to act into that. I think what we're probably doing now is sort of laying the the groundwork, at least with the base rate cut, building a bit of resilience into the economy so that once the virus has peaked, it can bounce back about a little bit quicker.
00:07:25 · Sarah Kocianski
[00:07:25] S1: I just I mean, be honest with you, I just I just don't think it's enough. I mean, it's bad enough if you're an SMB, you know, unless you're making toilet roll, in which case, I suspect you're fine. Or hand sanitizer. Or hand sanitizer. But if particularly if you are in, you know, hospitality or travel industries, imagine you're running a small cafe or a restaurant, we end up with a situation like, you know, God forbid, like Italy and everything has to close. I'm I'm just not sure it'll be enough. And and the bigger point, I think is, yes, my concern is for people and for small businesses. But with the markets the way they are, where are the banks finding this money? How are they going to be able to, you know, what impact is it going to have on the banks in the long term in the fact that, know, Lloyd's is stumped up, what is it, billion? NatWest has got 5,000,000,000. Yes. Some of that money is coming from the government, but the bank's capital reserves have been rinsed over the last week. So I wonder that's not it's not the concern for right now. The concern for right now is individual people. But with the looming fears of like crashes and Black Mondays in 2008 in the back of my head, I wonder how sustainable it is for the banks and how resilient they can be.
00:08:27 · Valentina Kristensen, Ross Gallagher, Sarah Kocianski
[00:08:27] S3: Well, I think that's that's a really good point. But, you know, the reality is with the markets going in the direction they are. I mean, FTSE one hundred fell another 10% when I just looked to my phone. So, you know, that means the people then are much more likely to save the money and put it in with the bank rather than investing it where there's obviously potential to get more returns than you'd be getting if you left it in a bank, which might be paying, you know, pretty low interest rates. But that's that be the place [00:08:52] S0: interest rates. [00:08:52] S3: Yeah. Record low interest rates. Exactly. You know, but, that's why you should pick up on with Open North because, you know, really good competitive rates. But, know, then I think that's that's where people will go. They'll... And that's that will be the way that, the banks will be able to get this this money. [00:09:05] S1: Yeah. I see. I don't think that's enough. I think that because so much of the bank's capital is not, you know, is is not deposits. I mean, a large proportion of it is, but the the rest of it is is invested, you know, that that is where it is. And, you know, if you look at the other things they've got, like, outstanding loans, yeah, of course, they're giving people a break and, of course, they should be. But at what point are they gonna have to call those back in and what impact is that gonna have? You know, I think it's a broader point actually like about this the coronavirus effect on you know as the opening line, was Ross ravaging the global economy?
00:09:05 · Sarah Kocianski, Ross Gallagher, Valentina Kristensen
[00:09:05] S1: Yeah. I see. I don't think that's enough. I think that because so much of the bank's capital is not, you know, is is not deposits. I mean, a large proportion of it is, but the the rest of it is is invested, you know, that that is where it is. And, you know, if you look at the other things they've got, like, outstanding loans, yeah, of course, they're giving people a break and, of course, they should be. But at what point are they gonna have to call those back in and what impact is that gonna have? You know, I think it's a broader point actually like about this the coronavirus effect on you know as the opening line, was Ross ravaging the global economy? [00:09:36] S0: No and markets have been rattled right? And again look it goes back again I think to the core points Sarah that you made in earlier on about anxiety. I think it's that anxiety is there, markets do not like uncertainty. There's a lot of questions around coronavirus that we just don't know the answers to and I think we're seeing the impacts in terms of the the impact on the market. And and and and to be honest, to me, just looking at this, it is all of the hallmarks of a very severe, economic shock. [00:10:05] S1: Can I just say that that anxiety is why we're also concerned about the pubs? Because that's that's the only way out of this, guys, is just ahead of the pub. [00:10:11] S3: Yeah. That's that's exactly my point. [00:10:13] S0: So And congregate. [00:10:14] S3: That's why they were, like,