Posted on: 06/07/2018
As SMEs continue to feel under-served by banks, the Financial Conduct Authority increases efforts to improve financial services for small businesses. This is the focus of its annual report which is published today, Friday 6th July 2018.
As SMEs currently contribute more than £200bn a year to the UK economy, it would be expected that financial services are well equipped to serve this sector to support them in achieving continued success. This doesn’t appear to be the reality according to research endorsed by the SME Finance Forum.
The research found that SMEs main demand from banks is access to financial planning tools and business growth advice; these services are not something SMEs feel they can currently access from their providers. With fintech and challenger banks entering the market at pace offering SMEs access to these tools, this puts banks at risk of losing their small business customers to these new players in the industry.
As banks spend the majority of their time nurturing relationships with only 20% of their client base, a massive 80% of their client’s needs are being neglected.
Rupa Ramamurthy, Vice President for Corporate Banking & Banking Business Services at Intelenet Global Services, comments “SMEs need a different type of treatment compared to larger organisations who want a broad set of services, such as international trade management and advisory services, which banks are equipped to do. If I were to put myself in their shoes, the first thing that’s an issue for a small or medium sized enterprise is cash flow. When I speak to small business owners they typically tell you they find it difficult to track and forecast their flow. They require banks to be a strategic advisor and product specialist who can help them to navigate through their cash flow journey and enable them to their growth ambitions.”
Rupa continues, “84 percent of SMEs want financial planning and business growth advice delivered digitally, but only 17 percent of banks currently offer digital financial management tools. Banks have a real opportunity to capitalise on SMEs’ need for advice, helping small business clients manage risk, business plans and cash flow.”
Our research exploring SME business support requirements, Real Insights from Real Business, finds that 72% of SMEs currently access business advice online, with 40% of these accessing business support via mobile devices and 16% via tablet. The majority of respondents are in agreement that the most useful aspect of accessing these services in this way is that they are able to benefit from the expertise whenever they need it the most.
With the future of digital demands only likely to increase, there are clearly measures which can be taken by banks to further enhance their service propositions, enabling them to meet the needs of SMEs. View our research report in full here to gain further insight into the business support requirements of SMEs.
Find out how we work with the private sector to support the growth of SMEs.