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UK inflation finally falls below 10% - Industry roundup: 24 May

UK inflation finally falls below 10%

The UK Consumer Prices Index (CPI), the measurement for headline inflation, rose by 8.7% in the 12 months to April, down from 10.1% in March. This is the first time since August 2022 that the country’s inflation rate has been in single figures. Monthly, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022.

Electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April, as last April’s rise dropped out of the annual comparison. However, this component still contributed 1.01 percentage points to annual inflation. 

Food and non-alcoholic beverage prices continued to rise in April and contributed to high annual inflation, although the increase of 19.1% in the year to April was marginally down from 19.2% in the year to March 2023.

Core CPI (excluding energy, food, alcohol and tobacco) remained sticky, rising by 6.8% in the 12 months to April 2023, up from 6.2% in March. This is the highest rate for the core component of UK inflation since March 1992. 

Speaking to the BBC, Chancellor Jeremy Hunt commented: “The fact that they have come down markedly - the headline rate - of course is welcome news, but there are things underneath those numbers which show that this battle is far from over. We’ve got a long way to go.”

Reflecting on today’s inflation news and what it might mean for SMEs, Douglas Grant, Group CEO at Manx Financial Group, said: “Back to single digit inflation for the first time this year and having narrowly avoided a recession, the UK economy could be showing signs of resilience. However, interest rate hikes and the latest flatlining GDP data continue to bring challenges that businesses are struggling to outmanoeuvre. Indeed, coupled with the global banking sector showing signs of weakness, SMEs must take this as a reminder to review their existing lending structures and ensure they can keep ahead of the storm.”


Taulia and ANZ look to advance working capital management solutions and strengthen financial supply chains

Taulia, a provider of working capital management solutions, and Australian bank ANZ have signed an agreement to collaborate across a range of working capital finance solutions.

As part of the agreement, ANZ will provide supply chain finance and dynamic discounting solutions enabled by Taulia’s front-end platform and integrated technology. With ANZ’s presence in the Asia Pacific region and its trade finance expertise, this collaboration is focused on helping clients enhance the resilience and sustainability of their supply chains, allowing their suppliers to gain access to capital more efficiently and cost-effectively. The goal is to offer this functionality to customers before the end of 2023.

Over the coming months, ANZ and Taulia will work together to extend the reach of their working capital finance solutions across both existing and new client networks. The pair say this will be further strengthened through Taulia’s acquisition by SAP, adding further opportunities across SAP’s growing ecosystem to deliver a differentiated experience for buyers and suppliers.

“With inflation still a key concern globally, we believe that CFOs should focus on their cash strategy to ensure they can survive and thrive during these turbulent times,” said Steve Scott, Head of Asia Pacific, Taulia. “Through this strategic relationship, we will be able to deliver cash to businesses when and where it is needed.”

“Providing our clients with working capital tools is a key priority in ensuring they can navigate the current landscape,” added Alan Huse, Head of Product Management, Transaction Banking at ANZ Institutional. “We’re looking forward to working with Taulia to explore new and innovative ways as we continue to help our clients effectively manage their supply chains.”


TreasurUp and TradeCrediTech to digitise credit risk management and trade credit insurance 

TreasurUp and TradeCrediTech (TCT) have announced their partnership which digitises credit risk management and trade credit insurance for small and medium-sized businesses (SMBs) through banks.

In this partnership, TCT manages an insurance integration platform through which banks manage the trade credit insurance of their SMB end-users purchased through insurers. TreasurUp will offer the trade credit platform to certain banks and integrate it into their online Commercial Banking portal.

The Trade Credit Insurance module banks can offer their SMB clients includes: online credit checking, credit reports, suggested credit limits, and ultimately request a policy for credit insurance, single invoice and buyer but also whole turnover products. Both TCT and TreasurUp are insurer agnostic.   

“There is a lot to optimise in the world of trade credit insurance,” said Niels van Daatselaar, CEO of TreasurUp. “Most SMBs do know about or understand trade credit insurance products. Banks mainly refer to trade credit insurance brokers where a separate onboarding needs to take place. On top of that, most policies are still being generated offline.”


Standard Chartered and KI group to develop B2B marketplace offerings

Standard Chartered and Europe-based venture builder KI group have signed a memorandum of understanding (MOU) to cooperate in exploring and developing solutions that will support the growing needs of B2B marketplaces among corporate clients.

While most B2B companies now offer e-commerce capabilities - with the pandemic being a significant driver of this change - proper growth and acceleration in this space are still largely untapped. Although 67% of the B2B buyer journey takes place in digital channels, according to a 2023 commercetools survey, about 66% of these buyers are dissatisfied with their online purchasing experience.

The MoU combines Standard Chartered’s expertise in banking services and market presence with KI group’s track record and network in e-commerce platforms and marketplaces. Both parties will tap into each other’s experience and capabilities in developing B2B marketplace solutions for their clients, in addition to screening and potentially bringing in other providers to offer a complete suite of marketplace infrastructure solutions.

“As global trade increasingly takes place online, such partnerships with best-in-class providers allow us to offer our clients a holistic solution that goes beyond banking to build a successful online marketplace,” commented Philip Panaino, Global Head of Cash Management at Standard Chartered. “Not only will this enhance our corporate clients’ ability to participate more actively in today’s fast-changing economy, it will also help expand their reach to even more customers around the world.”


DWR, SocGen, other tier-one bank execute first intraday repo trades with Broadridge

Broadridge Financial Solutions has announced that trading firm DRW, Societe Generale and another global tier 1 bank have executed intraday repo transactions on Broadridge’s Distributed Ledger Repo (DLR) platform. This follows DLR’s first intraday repo transaction in April 2023 and further expands the network across the global repo community. 

The DLR platform, which leverages Digital Asset’s Modeling Language (DAML), provides a utility where market participants can agree, execute, and settle repo transactions, providing flexible settlement cycles based on counterparties’ needs. The DLR platform increases settlement velocity and collateral mobility, thus making intraday possible. The platform also reduces the operating cost and risk of all repo activity and enhances intraday liquidity management. 

“We’re happy to be part of bringing a new trade type to the market that could help facilitate intraday liquidity needs.” said Greg Zielinski, COO, Societe Generale Americas. “By meshing distributed ledger technology with existing market settlement infrastructure, we can help usher in new flexibility for our clients via a secure and compliant channel.”

“Intraday repo allows us added flexibility to manage liquidity and help maximise use of capital, which was previously limited by technological barriers,” added Mark Wendland, COO, DRW.


Fifth Third acquires Rize Money to advance embedded payments offerings

Fifth Third Bancorp has announced the acquisition of Rize Money, an embedded payments platform that provides payment infrastructure and risk management capabilities to fintechs and other technology companies that want to offer financial products through a single API.

Embedded payments are a core component of Fifth Third’s treasury management business, which the bank says is growing at double digits, with annual revenue projected to eclipse US$130m this year.

“The addition of Rize Money enhances our existing embedded payments offerings and positions us to meet our clients’ ever-changing needs,” said said Bridgit Chayt, head of wholesale payments at Fifth Third Bank.


CBA launches new notice deposits to help SMEs maximise cash flow

Businesses will be able to maximise their cash flow through a new Commonwealth Bank short-notice deposit account that allows customers to earn higher interest while being able to withdraw funds with just 48 hours or seven days’ notice.

The new Capital Growth Account will offer an interest rate of 0.75%/1.5% higher than an equivalent at-call savings account. Customers will incur no loss of interest or fees if they withdraw funds from their accounts having given the appropriate notice over their chosen short-term notice periods. The bank notes that comparable accounts in the market have a notice period of at least 31 days.

Many businesses hold cash for lump sum payments for specific periods, mainly to cover tax payments at the end of the financial year. CBA data also shows that many small and medium-sized enterprises (SMEs) have largely maintained cash reserves after the Covid-19 pandemic. Customers currently hold 39% more in average deposit balances than in January 2020. Flexible notice accounts allow business owners to earn extra interest like a term deposit account on these funds without the same withdrawal restrictions.

“We know cash flow is key for our customers, especially in the current economic environment,” said Mike Vacy-Lyle, Group Executive of CBA’s Business Bank. “This means customers don’t need to trade-off higher interest accounts with the requirement to provide a longer notice period or lock away funds in fixed term and wait for them to mature ahead of accessing them.”

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