The government undoubtedly positioned this year’s budget as, ‘The Small Business’ budget. However, if a recent report is to be believed, the key to economic recovery isn’t just giving small businesses and companies that have recently formed increased access to finance, it is developing the relationships that exist between banks and small business owners.
According to the report conducted by business insurance specialist PWK, while the small business and company formation sector makes up more than thirty per cent of banking’s business, new businesses or small business are also seen as the most high-risk sector. The survey claims that here in lies the challenge; how can banks develop strong and mutually beneficial relationships with small business, while protecting themselves against the inevitable risk involved in lending to them?
James Matthews, founding partner of accountancy firm ‘Matthews Associates’, comments; “When we ask our clients, who the rely on externally for business advice some said their contemporise, many said their accountant and none said their bank manager. This a telling reflection on the way in which banking relationships are handled in the country.”
“Start up business banking is an incredibly competitive market for banks at the moment and the ‘Big Four’ as they are commonly known are being incredibly aggressive in terms of their marketing approach, to secure the business accounts of a company at the start of its business banking lifecycle. However, regardless of the amount of money banks pour into marketing, if they don’t begin developing long term relationships with their clients, it will be completely wasted revenue.”
“Banks depend on the revenue generated by small business accounts so they must begin investing in strong and profitable relationships with the clients they fought to so hard to get.”