Three quarter of all SMEs have no human contact with their bank

Research from SMEs demonstrates that the shift to digital services has increased the risk of switching financial service provider, and that banks must move towards a model that drives engagement through business critical insight and services to defend against SME churn.

Banks have little dialogue either face to face or via digital channels, with 73 per cent of SMEs having no contact with a relationship manager.

Two thirds of UK SMEs are now happy to look elsewhere for financial services and more than half are tempted to switch banks.

Despite this disengagement, 49 per cent of SMEs have been with their current bank for more than five years and 67 per cent would feel more engaged with their bank if they offered tools and advice to help with day-to-day business tasks, future planning and general efficiency.

John Davis, managing director of BCSG, who commissioned the research, says that banks are under enormous pressure to reduce costs while increasing their bottom line.

‘The majority are adopting a digital-first approach as they pursue cost efficiencies and adapt to changing customer preferences. But this has had unintended consequences,’ he comments.

‘Banks are now acting as reactive customer service outlets, providing basic services when asked, rather than proactively providing the advice and guidance that their customers require. The result is that many SMEs are now shopping around for financial services.’

However, Davis adds that banks are in a strong position given they have, effectively, a captive client base, with nearly half retaining the same bank for over five years.

‘By utilising their digital infrastructure better to deliver guidance, insight and tools to their SME customers, forward-thinking banks can combat churn, cement a highly valuable stream of revenue and move from a basic transaction provider to a trusted business partner.’