What do SMEs really want from their bank? » SMEInsider

What do SMEs really want from their bank?

Widespread dissatisfaction among British businesses with the service on offer from their banks could see a major overhaul in the market, with more variation and options to suit their needs.

Nearly two-thirds of businesses do not agree that their bank has a good understanding of their business and four in five say that their bank drags its heels when it comes to guiding them towards the best account for their money. However, 37% say that they avoid exploring alternatives because they are nervous about damaging their relationship with their bank.

UK banks have been accused of creating stagnant monopolies, and are under pressure to break into smaller entities to make the market more competitive, with better options for consumers.

Lloyds recently carved off TSB into a separate high street bank, while RBS is preparing to create the independent lender Williams and Glynn, both at costs of billions of pounds.

However, challenger banks such as Virgin Money and the Yorkshire Building Society (YBS) say that customers are still “sleepwalking” into holding accounts with the biggest banks, and are calling for the Competition Markets Authority (CMA) to divide up the “Big Five” in order to create more, smaller challenger banks to boost competition.

So, what do SMEs actually look for in a bank? According to Standard Chartered, it’s all about making their businesses faster, cheaper and better. A big part of this is offering a greater number of digital and mobile solutions that allow company owners to do more on the move. These channels need to be well-integrated for a “seamless experience,” they add.

As well as convenience, SMEs are looking for a personal touch, say Accenture. Reporting on their research into the sector, the management consultancy firm said: “today’s SMEs want many things: more appropriate and innovative financial services; sound, commercially-aware advice, not just on products and services, but also wider business issues; and more tailored and responsive multi-channel banking.”

For banks that get it right, the rewards are huge. SMEs employ 60% of private sector workers and collectively turn over as much as their big-business counterparts. What’s more, says Accenture, SMEs are often “fiercely loyal” and so, once they find a bank that works for them, they’ll stay. Now that challenger banks and alternative finance firms are nibbling away at the market, the Big Five will have to shake of their complacency and work hard to win smaller businesses over from the start.




  • Charles Wendel

    In the US, alternative firms are beginning to gain traction. They are also working with banks as partners, taking deals that banks will not do and supplying operating and risk platforms to give banks great productivity and allow them to complete more transactions. Small businesses want to be know they can borrow money, even if they never intend to do so.