SMEs experience weakening dialogue with their banks

The working relationships between SME owners and their retail banks are weakening, according to new research from cloud solutions firm BCSG.

Their report demonstrates that the shift towards digital services – with little or no face-to-face dialogue – has increased the risk of businesses switching their financial service provider.

It suggests that banks must do more to drive engagement through business critical insights and services that guard against the ‘churn’ of SMEs.

Almost three-quarters (73 per cent) of SMEs admit they have no contact with a relationship manager from their bank and more than two-thirds (67 per cent) of UK small business owners are happy to look elsewhere for their financial services.

Despite this apparent disengagement, almost half (49 per cent) of SMEs have been with their current bank for more than five years and 67 per cent admitted they would feel more engaged and contented with their current bank if they offered tools and advice to help with day-to-day business tasks, future planning and general efficiency.

John Davis, managing director, BCSG, believes banks are under increasing pressure to reduce costs while 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 Davis.

“Banks are now acting as reactive customer service outlets, providing basic services when asked, rather than proactively providing the advice and guidance that their customers require.

“The result is that many SMEs are now shopping around for financial services.”

However, Mr Davis feels that banks remain in a relatively strong position given their captive client base – and their ability to retain some SMEs for more than five years.

“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,” added Davis.

Date published 16 Sep 2015 | Last updated 16 Sep 2015