Businesses more likely to recommend banking

Friday 15 January 2016

New research has found that many small firms are becoming more positive about their relationship with their banks. 

The Business Banking Insight report (BBI), which was conducted by ICM and overseen by the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB), found that less than a quarter (23 per cent) of businesses would recommend their bank to others.

In 2015, the survey, which looked at more than 12,000 small businesses, this figure rose to 26 per cent. It also found that firms with younger employees were more likely to have a positive view of their bank.

Mike Cherry, national policy director at the FSB and spokesperson for the BBI, said the study shows that banks are "making progress" in appealing to younger business customers. He said the results indicate that the wider industry can continue to have lessons to learn from newer banks in the market.

“This is a clear demonstration that improving competition in the business banking market can lead and should lead to improved services for all small businesses. We trust all the banks will use these BBI’s findings to give business customers the service they expect."

According to the research, companies had been created in the last five years were much more likely to move their business account in the next six months, with 15 per cent of them looking to change.

In contrast, just eight per cent of firms founded before 2000 intended to switch their bank in this period, while the national average was ten per cent.

Looking at individual sectors, the study found that one in five companies in the financial sector were likely to recommend their bank, compared to 26 per cent of all firms across all sectors.

Geographically, smaller firms in Northern Ireland had the highest levels of recommendation with their banks, with 28 per cent wanting to do this. In contrast, those in Wales had just 22 per cent of SMEs who would look to do the same. 

John Longworth, BCC director general and spokesperson for the BBI, said: “It is reassuring that there has been progress in improving customer satisfaction among businesses, but there is clearly more to be done. Competition among lenders is driving this change."

He said many businesses look to other firms but said that more CMA initiatives were needed to enable SMEs across the UK to learn from the experiences of their peers before choosing products and services. 

"SMEs are the backbone of British industry and the BBI initiative is designed to offer additional support to this vital part of the UK economy,” Mr Longworth added.

By Victoria McDonnell

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