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Small firms want 'value-added' services

Banks ‘missing out’ by failing to satisfy SMEs

Bank of Scotland branchBanks are losing out on a potential £8 billion of revenue by failing to broaden their services for small companies, according to a revealing new report.

Small and medium enterprises (SMEs), a sector which generates just under half of the UK’s private sector turnover, want their banks to provide more relevant “value-added” services.

The report from Accenture SME Banking 2020; Changing the Conversation (and capturing the rewards), says banks have an opportunity to develop more tailored propositions to meet the needs of these customers.

Currently, 58% of SMEs choose a bank based on low cost and 56% for overall service quality.

But just 4% choose a bank for value-added services to help them improve business performance, customer service and sales.

More than 60% said they would use their bank if these value-added services, such as bitcoin and peer-to-peer lending, were offered.

The findings suggest a significant gap between what SMEs want and what banks can provide, leading to a missed opportunity for UK banks and potentially a lack of the right support for SMEs to grow.

In addition, there is also a need for banks to play a more active role in their relationship with SMEs. Some 60% of respondents are looking for closer engagement with their bank, 32% want their bank to be proactive in suggesting ideas, and 28% want their bank to recognise that their needs may not be simple and provide more complex services on demand.

There is also a clear opportunity for banks to apply the digital channel strategies for retail customers to the SME segment. While SMEs currently opt for human interaction over digital services, with relationship managers the preferred channel for advice, applications, complaints and non-banking services, opportunities exist to migrate them to digital channels.

Accenture’s Gareth Wilson said: “SMEs want banks to be more relevant and provide a wider range of business services. Banks need to recognise and seize this opportunity.

“Unless they do, SMEs may take their business elsewhere. Banks need to shift their mindset from ‘FS service provider’ to ‘SME service provider.’

“Through new technologies and new thinking, banks can capitalise on £8.5bn of potential annual revenues. If they don’t they risk being disrupted out of a market that SMEs actively want them more involved in.

“Furthermore, the benefits for SMEs to have their bank broaden its service portfolio beyond pure financial services are significant to future profitability.

“SME’s can have minimal access to important market data which could cause the SME to misjudge the gap between production and market demand (based on lack of information), this could put it in danger of a loan default. A clear example of where banks need to help bridge these potential gaps by providing SMEs with broader business services.”

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