25 September 2017
Nick Ogden


Nick Ogden - ClearBank

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Are banks truly supporting UK businesses?

28 May 2012  |  2673 views  |  1

There is certainly a lot of focus in the UK on small businesses at the moment.  Given the massive potential for small businesses to plug the hole in the UK economy, it is unsurprising that the failures of high street banks to provide affordable loans has attracted both questioning and anger. It seems interesting then that there has been so little discussion about the wider role that banks can play in supporting small businesses.

The top four banks hold over 80 per cent of small business bank accounts in the UK.  But non-bank business finance is having its moment, and with new players now stepping in to fill the funding hole that banks have left UK businesses with, now is the time to question – are banks truly supporting UK businesses?

A few weeks ago I wrote a blog looking at the current customer demand for innovation in banking – the market is awash with new players, from PayPal to Amazon, all vying for a slice of the banking pie and happy to offer new and exciting banking products. 

Competition is definitely hotting up and banks need to offer more – especially to the UK’s small businesses who entrust so much of their capital to them.

There are a number of ways for banks to improve support for small businesses.  Overdraft and loan interest rates are just one example. 

Most banks offer short-term financing solutions, but these are often tied up with high interest rates and prohibitive fees.  At a time when all businesses, whether small, growing or giant, are struggling with a harsh market environment, short-term financing is critical to business stability – and there are plenty of players looking to take advantage of this gap in the market. 

The fact is that businesses, particularly fast-growth companies, need funding to survive, so if banks are not providing affordable options, these companies will be forced to look elsewhere.

Other business support options might include some of the innovative solutions I have previously written about: online banking, mobile payment support or contactless payment capability. It could even include ‘soft’ support, like Barclay’s free ‘Start-up Guide’, which it gives to new business customers.

One thing is clear – the banking industry needs to buck up its ideas and commitment to the customer if it is to fight off competition from new non-bank players.  This is especially important if banks are to support small businesses, which are increasingly happy to look elsewhere for the financial support that they require.   


TagsRetail banking

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 29 May, 2012, 12:38

As the subprime mortgage crisis exposed, bankers make more bonus when they lend more money.

If, this time around, they're reluctant to make more loans to small businesses, there must be something more than lethargy or complacency to explain their behavior viz.:

  1. Increased capital requirements to comply with Basel-III
  2. Heightened scrutiny of their Non Performing Assets by regulators (this has already started happening in India), and
  3. Starting troubles faced by non-banking competitors like Wonga under regulatory oversight, well before they've become 'too big to fail'. 
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job title Executive Chairman
location London
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I am passionate about business change and have been fortunate to have had some success with my various start up ventures. I am also fortunate to be a director of the UK Faster Payments Scheme.

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