24/07/2024 10:05 AM


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What is the best solution for SME’s

Small and Medium-size Enterprises (SMEs) are the engine of the economy. Businesses ranging from sole traders to those with 250 employees create between 50-60{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of business value in developed economies.

But these essential businesses are stuck with anachronistic financial services providers that have not moved with the times and may no longer be fit for purpose. We have seen in coverage, and a new report seems to concur with the difficulties SMEs face in accessing credit, getting paid and finding financial partners that are focused on their needs.

The new Revolut research highlights a world still dominated by the traditional high street banks in which relatively high levels of reported satisfaction are contrasted with significant desire for change.

It reveals a market characterised by long-term relationships but rapidly evolving needs. The growing tension between established service providers and dynamic, fast-moving business requirements is a consistent theme connecting the responses of SMEs across sectors and geographies.

What do SMEs value in their business banking partner

The reasons why businesses choose a bank are fast changing, as digital native businesses demand a digital-first experience. By talking to businesses in the UK, France and Poland to better understand the services clients want and the types of business accounts they use, the report aims to find out how they use their accounts today, what features are useful and which have been outgrown. Plus, where new thinking, new technology and new approaches could add value.

Fundamentally, the research reveals an inflection point. Loyalty, comfort and acceptance is fast giving way to concern. Can the needs of digital-first business be met by existing relationships?

The research among SME’s in the UK, France and Poland, suggests that many are relying on the relationships that served their businesses five or even ten years ago. Amidst all the change of the last decade, it’s worth checking to see if more modern approaches and innovations could supercharge businesses.

79{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of SME’s in the UK have their primary banking relationship with one of the established high-street banks such as Barclays or RBS. The majority, 43{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the UK (38{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in France) selected the same bank for their business as for their personal banking. Poland is an outlier here with only 20{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} making that decision.

It’s a no-brainer that businesses have chosen banks with big storefronts and big brand recognition – physical proximity to the business is one of the biggest reasons SME’s select their banking provider according to 38{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of SME’s in Poland and France, and 27{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the UK. But is this majority making the smartest choice for their business needs?

In total, 63{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} have had the same bank for more than five years. The smallest businesses (1-10 employees) have the longest relationships, with 35{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} having the same bank for over 11 years. Loyalty can be a virtue, and we all like stability in our business relationships, but the world has changed over that time, and so have business needs.

New approaches to business banking might now be a better fit

Business banking requirements are very different from personal banking, especially in today’s fast-moving digital economy. For example, opportunities to reach global customers and engage international suppliers are multiplying for almost every business.

55{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of SME’s do some international business, either with customers or suppliers, and a further 13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} expect to start doing so soon.

A recent survey found 52{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of European SME’s looking to expand into a new European market in the coming 12 months. So, SME’s need the flexibility to pay and be paid in multiple currencies, to authorise staff to make payments, access and manage accounts and other services not available with basic accounts.

Just because a bank is a good fit for your personal accounts does not mean it will be the best choice for your business accounts.

To read the full report CLICK HERE

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