B2B Payments

SMEs Unimpressed With Bank Advice


The latest report from Close Brothers could be bad news for banks looking to stay competitive in the SME finance space.

The firm released new data this week that found 80 percent of SMEs in the U.K. say they are not always adequately serviced with the advice provided by their banks, reports said Thursday (Nov. 10).

The statistic is yet another piece of evidence on how traditional banks could be falling short of meeting their SME clients’ needs. Just 19 percent of small businesses surveyed, for example, said their banks adequately met their financing needs, with a quarter of businesses reporting they were turned away from a bank as they sought financing to grow.

Researchers declared this was a serious threat to the nation’s economy.

“SMEs play a huge role in the success of the U.K. economy,” Close Brothers’ report concluded. “It’s vital that lenders, and the wider market, understand how best to support them, including properly differentiating SMEs according to their size, growth stage and sector.”

According to the survey, the inability to afford the financing offered is a top concern for small businesses. But researchers also found that lenders lack an understanding of an SME’s industry or the individual needs of each business that seeks financing.

And while High Street banks are a top source for financial guidance, the vast majority of SMEs said the advice given was inadequate. In the wake of the Brexit vote, the report noted, small businesses have been increasingly turning to their banks for guidance.

Brexit has led to uncertainty among the SME community, reports said, but the situation could present an opportunity for these companies as they look towards policymakers to reduce red tape.

Alternative lenders have emerged in the U.K. on the premise of filling the gaps left by traditional banks, but Close Brothers found that only 9 percent of SMEs had used peer-to-peer or crowdfunding loans to get financed. In a statement, Close Brothers’ commercial division chief executive, Adrian Sainsbury, pointed to the recent launch of the U.K.’s bank referral scheme, a move that requires banks to refer SMEs to alternative lenders if rejected for a loan.

He described it as “a positive and purposeful step both for businesses and the economy.”



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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