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SMBs Feel Neglected By Banks — But Lack Unbiased Information To Switch

U.K. small businesses (SMBs) have made it clear they’re willing to switch financial service providers to access the financial services they need to thrive. But the latest research on the industry suggests SMBs struggled with biased information as they seek out better providers and feel neglected by their current banks.

Two separate surveys released earlier this month highlight the plight of small business owners as they seek out adequate financial services.

Consultancy firm Adaptive Lab’s “SMEs: Smallish Misunderstood Enterprise” report said small business owners feel financial service providers fall back on a “one-size-fits-all offering,” with 59 percent noting they experienced limited customization to their needs. Forty percent of SMB survey respondents said they see little difference between SMB and consumer services from banks, for example, except for the higher cost of SMB services.

In addition to their willingness to switch providers, small businesses are also willing to pay more for better services: Fifty-five percent of SMBs surveyed by Adaptive Lab said they are willing to pay more, while an additional third of SMBs said they would at least consider paying more for services that free up time for entrepreneurs to focus on their businesses.

Most (59 percent) said they believe large service providers in banking and other sectors treat all small businesses the same, and 56 percent said they do not trust large corporates to understand the needs of small business owners. More than 60 percent of SMBs considered “highly ambitious” agreed that SMBs are underserved and undervalued by large service providers, researchers said.

The survey found that businesses aren’t just fed up with a lack of adequate service from banks: These trends also applied to other service providers, including insurance and telecommunications.

“Most service providers approach the SME segment as a homogeneous community, ignoring their diversity and unique needs,” said Adaptive Lab Principal Chris Moisan in a statement. “Is the definition of an SME still fit for purpose? The small and medium business sector is a mighty force in our economy. The opportunities are huge for any business willing to rethink their approach and reimagine services for SMEs, so we wanted to better understand the issues and scope of possibilities for both sides.”


The Struggle to Switch

While bank switching is in the cards for fed-up SMBs, separate research from Business Banking Insight (BBI), also released this month, found entrepreneurs said there is a lack of unbiased, independent data available to them to choose the right financial service providers and products.

BBI’s survey, reported in Cambridge Network, found more than a fifth of SMBs cite a lack of independent data as their largest barrier to accessing the right financial services, while nearly 29 percent said the amount of time it takes to gather the data that is available to them is also a major barrier.

The report also warned that while there has been a rise in the number of challenger banks and alternative financial service providers in the U.K., this also makes choosing the right provider more difficult.

“While a much wider range of options now exist, this research clearly shows that navigating less traditional sources of finance is time-consuming and sometimes baffling to busy entrepreneurs working hard to run their businesses day to day,” reflected Federation of Small Businesses National Chairman Mike Cherry in a statement.


Optimism Survives

Despite U.K. small businesses’ struggle for elevated financial services, entrepreneurs’ optimism remains.

A third report, published by Bibby Financial Services this month, found small business confidence is the highest it’s been since 2015. The firm’s SME Confidence Tracker found that half of small businesses expect to see an increase in sales. Overall, the Index’s reading increased by six basis points quarter over quarter, marking the highest reading since Q2 2015, the firm said.

“It is clear that even limited clarity over Brexit — and some compromise on behalf of both the U.K. and the EU following recent negotiations — has had a calming effect on SMEs,” said Edward Winterton, U.K. CEO for Bibby Financial Services. “This has resulted in a marked increase in confidence, which is long overdue following two years of tumbling confidence and subdued investment.”

Still, 43 percent of SMBs surveyed by Bibby Financial Services said Brexit and other factors of economic uncertainty are preventing them from making investments in the coming months. More than a quarter said they struggle to hire skilled workers, and nearly the same portion said they have been forced to increase wages to retain talent.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.