A new study commissioned by BCSG has revealed that the relationship between retail banks and their small and medium sized business (SMEs) customers is weakening. The research 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.
The study, conducted in June 2015 and using primary data provided by RedShift Research, surveyed 250 UK Managers with responsibility for banking at SMEs employing 250 people or less.
“Banks are under enormous pressure to reduce costs whilst 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,” said John Davis, Managing Director at BCSG. “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.”
“There is good news however. 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,” concludes Davis.
UK SMEs have gone digital
SMEs are historically loyal customers but are disengaging from their existing relationship
Access to tools and business insight would help SMEs to feel more engaged
The report underlines the importance of, and specific opportunities towards deepening the relationship between banks and their SME customers.