High street bank TSB published a report in Parliament this week which found that giving SMEs access to the financial tools, products and advice they need would increase their productivity by 10% and boost the UK economy by £70bn.
The study, which is based on a survey of 550 SMEs carried out by Oxford Economics and YouGov, revealed widespread dissatisfaction with current business banking options. Just under half (49%) of respondents believe that their bank understands their needs, with 42% stating that lacklustre bank services are actually holding their firm back.
This, in turn, is leading to very low adoption of technologies and digital services that could actually help small enterprises grow. According to the TSB report, just 62% of SMEs currently use accounting software and 53% use tax software.
To help SMEs access the guidance they need, TSB has suggested that banks improve their small business offerings while providing local advice services. The report also insists that banks must be more transparent about fees and charges that could impact smaller enterprises, while supporting them in making smart borrowing decisions.
“[This report] shows that a new relationship between banks and businesses is not only possible but profitable too,” says Martin Whitfield MP, vice-chair of the All-Party Parliamentary Group on Fair Business Banking. “A relationship which focuses on giving SMEs the local support and guidance they need to grow and which offers them the financial services they require to exploit the digital age.”
TSB’s calls to action come at a critical moment for high street banking services. According to a report released last month by Expert Market, a comparison site for card payment systems, bank branches could vanish altogether by 2041. Years of branch closures and reduced opening hours have left many SMEs without easy access to in-person financial advice.
“Despite the rise of online banking, the ability to bank in person is something many still rely on, particularly those up against slow broadband speeds,” says FSB Chairman Mike Cherry in a statement.
If banks truly want to assume an advisory role for the UK’s SMEs, they may have to think twice about shutting up shop, particularly in remote or rural areas.
Read more about business banking for SMEs
- Lenders offering poor digital service risk losing small businesses to challenger banks
- High street ATMs could be history in less than 20 years
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