• Danesh Nigah
  • Published: 16 September 2019

Just over 5 percent of all current account switchers were either small and medium sized enterprises (SMEs) or charities in the first half of 2019, and with SMEs counting for 99.9 percent of all private businesses in the UK, there are a potential 5.7 million customers that new market entrants want to attract and existing providers are trying to retain. With challengers offering slick user experiences and financial benefits, what can traditional banks learn? 

Easy onboarding

When digital banks arrived to shake up the personal current account market, traditional banks realised that opening accounts shouldn’t be difficult. No longer should you be required to book a face-to-face appointment with your local branch and find several unique documents to prove you’re you – the whole process should be fast, simple, and mobile. With recent entrants such as Starling and Tide now offering this same account-opening ease for their SME customers it seems the business banking sector is going through a similar revolution. 

Onboarding is a hurdle for any SME wanting to open an account with a traditional bank, with lead times measured in weeks compared to minutes. Onboarding should be fast, simple, and mobile - leaving small business owners more time to invest into growing and making their business a success.

Low cost FX and cross-border trading

In an increasingly global economy, small businesses are no longer restricted to local customers. Many SMEs trade through e-commerce sites such as Etsy or Amazon Marketplace, allowing them access to a global audience. Similarly, with the procurement of goods to sell, business owners may look overseas for more cost-effective production and with products such as PayPal’s business debit card offering fee-free forex and 0.5 percent cashback on purchases, one more barrier is removed. 

Traditional banks have been slow to respond with similar offerings for personal accounts, let alone for business customers. Forex fees are a key revenue source for retail banks but with many providers offering fee-free alternatives, it’s time they innovate and create new revenue opportunities. 

Beyond core banking

Businesses probably have a higher potential for growth now than at any point in history. Smart business owners will make use of automated analytics tools and services to identify weaknesses and areas for expansion, and with social channels being utilised in more creative ways their audience is unlimited. Key to growth is funding, and with recent entrants such as Funding Circle promising easy, quick, and transparent loans for businesses, the idea of growth becomes far more feasible. 

Traditional banks often have complicated and lengthy loans processes, and they need to simplify them. RBS and NatWest have taken a lead through their partnership with Nift to simplify their terms, and with their sub-brand Esme Loans designed for their SME customers. Others can achieve similar success through these types of integrations.

APIs and integration

With app and cloud-based services to help businesses with a range of tasks - from simple inventory management to automated accounting and tax form submission - SMEs can better optimise their business and have complicated tasks done for them. Better still is the integration of these with their bank. For example, Mettle can provide key information to third-parties through APIs, all controlled by the account owner – it means invoices can be generated automatically and all transactions appear in your accounting app instantly. This is in addition to user-friendly features such as anytime mobile sign-up and real-time notifications, and SME-focused ones including invoice generation, invoice tracking, and receipt capture and management.

Barclays can generate and track invoices directly from the app, and similarly NatWest has an invoice tracking feature, but traditional banks are still not allowing the same level of interoperability provided by their digital competition. They also stand to gain by partnering with third-party services and bundling these into add-ons for its customers. Businesses that are offered new services and integrations through a bank they trust are presumably far more likely to consider using them – a win for businesses, banks, and third-party providers alike. 

Improvements to customer onboarding, mobile experience, and service offering are no longer optional. There’s a huge opportunity for traditional banks to improve and help their business customers thrive. They are uniquely placed to offer services across both physical and digital channels; traditional banks can become the innovative, digitally-enabled bank their SME customers demand. 

Want to know how Capco can help you? Take a look at some of our recent banking successes or reach out to David Beale.