Big banks are letting our smaller businesses down, according to new research: the UK’s small to medium sized enterprises (SMEs) say they are languishing in economy compared with the first-class treatment given to bigger businesses by the banking industry.
A Fair Financial Playing Field for SMEs? Don’t Bank on It is a new report from the Saffron Building Society, a 175-year old mutual society providing specialist small business savings accounts. The Saffron found that almost two-thirds of SMEs (60%) – those businesses which collectively account for almost 17 million jobs and 50% of the UK’s turnover – believe bigger banks prioritise larger companies, giving them a superior service.
On top of that, almost half (49%) feel big banks are limiting access to cash and cheque transactions, something much more important to smaller businesses than large ones.
The shift towards automation and AI is also causing ripples of concern among SMEs: they believe it heralds a move away from the personal service they rely on and towards a hands-off approach.
Saffron Building Society’s chief commercial officer is John Penberthy-Smith. He said: “Despite their significant contribution to the UK economy, SMEs often encounter substantial barriers when seeking financial services from large banks.
“Why is it that such a crucial part of the UK economy is floundering when it comes to financial advice, support and options? We must unlock the potential of these millions of businesses and empower them to thrive.”
Ian Cass is the managing director of the Forum of Private Business and chair of the Micro Biz Alliance. He said: “It’s past time the bigger banks recognised the importance of our small businesses and provided them with the support and the services they need and, frankly, deserve.
“Saffron Building Society has made it clear they’re committed to making savings work for smaller businesses – now let’s see if the wider banking industry can follow Saffron’s lead and stop short-changing our SMEs.”
Headline report findings
SMEs:
- Feel forgotten by big banks: 60% of SMEs believe that big banks put larger businesses first while half say providers simply don’t understand them and their needs;
- Need more flexibility: 73% of SMEs say there should be greater flexibility to meet their needs;
- Depend on personal relationships: 66% of SMEs want a Relationship Manager who understands their business, rising to 93% among larger SMEs;
- Worry about automation: 62% of SMEs fear that increased use of AI and automation will negatively impact the personal service they value;
- Are sunk in apathy: despite dissatisfaction, 65% of SMEs have no plans to switch providers.
Saffron Building Society is leading by example – the Society has already taken on board the SME feedback, and redesigned its dedicated business savings products to accommodate the challenges faced when running a smaller business. The new range of nine specialist business savings options includes instant access accounts as well as notice accounts, with a choice of competitive rates and terms. The Society also offers its unique Business Savings Promise, enabling businesses to access up to 50% of fixed term funds early if they should find themselves in unexpected financial difficulty.
On top of that, the Society is committed to maintaining its branch network for those local business that prefer face-to-face interactions and maintaining its UK-based phone service, underpinned by online and app options for those who prefer them. In addition, there are two new dedicated managers who will provide informed advice to businesses that want to make the most of their savings.
John said: “We are committed to listening to our business customers and acting on what they tell us to deliver the support and the products that they need. It is time that more financial institutions did the same – Saffron is calling on the industry to do more, and SMEs must demand that, too.”
SME facts and figures
- Economic contribution: SMEs account for 99.9% of all UK businesses, with 5.6 million businesses operating at the start of 2023 (UK)
- Employment: SMEs are crucial employers, accounting for 61% of the total employment in the private sector, which translates to 16.7 million jobs (The Federation of Small Businesses)
- Turnover: SMEs contribute significantly to the economy, generating around half of the turnover in the UK private sector, approximately £2.4 trillion (The Federation of Small Businesses)
- Micro-enterprises: The Department for Business and Trade estimates that more than 1 million micro-enterprises (with nine or fewer employees) and more than 4 million sole traders, as of October 2023 (UK)
- New business: The number of private sector businesses increased by 46,000 between 2022 and 2023, showing a resilient and growing business environment (The Federation of Small Businesses)
- Growth mindset: 86% of SME businesses plan to grow business revenue in 2024, a 3% increase on last year (UK, SME SKILLS HORIZON 2024)
- Optimistic: In Feb 2024, a significant proportion of SMEs were optimistic about the future, with many expecting increases in turnover and stability in the coming months (Office for National Statistics)
Notes
A Fair Financial Playing Field for SMEs? Don’t Bank on It is available from the Saffron Building Society press office.
About the research
The survey was conducted by Opinium between 21 and 30 May 2024. It involved 502 financial decision-makers in SMEs, with a representative spread across micro, small and medium enterprises.
