A new study suggests the relationship between high street banks and SMEs is weakening as the shift to digital has led to more businesses switching providers or seeking alternative forms of financing.
The study, commissioned by clouds services market place provider BCSG, has found that banks have little dialogue either face to face or via digital channels, with 73 per cent of SMEs having no contact with a relationship manager and seven out of ten (67 per cent) actually being happy to look elsewhere for financial services and more than half are tempted to switch banks.
The same number of people who said they would be happy looking elsewhere have also said they would feel more engaged with their bank if they offered tools and advice to help with day-to-day business tasks, future planning and general efficiency.
“Banks are under enormous pressure to reduce costs whilst increasing their bottom line. The majority are adopting a digital-first approach as they pursue cost efficiencies and adapt to changing customer preferences. But this has had unintended consequences,” said John Davis, managing director at BCSG.
Davis goes on to say how going digital has made banks “reactive” in the sense that they only provide basic services rather than proactively tailored advice and guidance to their clients.
“The result is that many SMEs are now shopping around for financial services.”
Not all bad
Despite this disengagement 49 per cent of SMEs have been with their current bank for more than five years, suggesting that there is still trust between the customer and service provider. Davis says these long-term relationships potentially put banks in a strong position.
“By utilising their digital infrastructure better to deliver guidance, insight and tools to their SME customers, forward-thinking banks can combat churn, cement a highly valuable stream of revenue and move from a basic transaction provider to a trusted business partner,” he concludes.
SMEs going digital
More and more businesses find digital ways of banking very convenient: 85 per cent use online/mobile banking on a monthly basis and 33 per cent on a weekly basis, whilst 28 per cent visit their branch once a week. However, 41 per cent never visit a branch.