Banks no longer first port of call for half of Britain’s SMEs

A new survey has revealed that the number of people who have considered going somewhere other than their bank for finance is on the increase.

The insights come from a new survey conducted by business finance provider Growth Street. The firm canvassed more than 2,000 directors and employees of British SMEs in January 2019, following up from its inaugural survey in 2018.

As hundreds of millions of RBS competition fund pounds are being distributed to challenger banking brands, Growth Street’s findings shine a light on an increasingly savvy business finance customer base.

Growth Street’s survey highlights respondents’ decreasing reliance on banks as their predominant source of finance and advice, as well as an improvement in respondents’ understanding of alternative options. More than a third of respondents (35%) stated that they had considered going somewhere other than their bank when thinking about funding their business in the past, up from 30% in 2018.

People’s understanding of alternative finance options is also shown to be on the increase. 34% of respondents said that they were not at all confident in their knowledge of non-bank funding, significantly fewer than the 45% of respondents who attested to the same lack of knowledge in 2018. 66% of respondents had at least some knowledge of finance outside of banks, up from 54% in 2018.

Greg Carter, Growth Street CEO, comments:

“The fact that nearly half of British SMEs have looked beyond the banks for business finance is a symptom of profound changes affecting the financial services ecosystem. As more and more SMEs realise that there are real alternatives to the traditional banks’ offerings, I expect this figure to keep rising.

“It’s incredibly exciting to see the growing numbers of providers challenging banking orthodoxy. Having announced a ground-breaking new partnership with Starling Bank last year, Growth Street is at the forefront of this trend.

“I don’t think business owners want the moon on a stick: they want fast, flexible access to finance, and they want a combination of cutting-edge technology and empathetic, understanding relationship management. The firms that bring this combination to market will prove crucial in providing SMEs with the best finance options available to them. I think non-bank funding options have a central role to play in the future of UK business banking.”