UK Small Businesses Increasingly Concerned About Mobile, Other “Challenger” Banks
Small businesses and banking have never really gotten along well. For many traditional banks, small business customers are just that, small, and as a result very difficult to put to work making money for said banks. This is especially true in the UK, where a wave of “challenger” banks doesn’t seem to be doing the small business all that much good.
A study staged by CivilisedBank found that, since the last financial crisis, about one in four small businesses believe that banks are engaged in business as usual, and that means a greater focus on the bird in the hand rather than the two in the bush. Basically, banks are focusing on quick, short-term profits rather than long-term gains, and that’s hitting the small business where it lives.
Small businesses aren’t big moneymakers anywhere; that’s why they’re called “small” businesses. Several small businesses in aggregate could mean big money, though, and that’s what the new wave of so-called “challenger” banks was supposed to be about. This includes a substantial number of mobile-only banks that are better suited to addressing the small business, but there’s not much evidence they’re doing that.
Some newcomers, like Coconut, are making some progress on this front, bringing out a study of the self-employed to reveal some of the challenges they face. For instance, better than one in four don’t contribute to a pension fund. Throw in the challenges associated with a small business like tax reporting and expense tracking and it becomes clear that the small business has some big headaches.
It’s a point that every bank could bear in mind, and not just the “challenger” banks, either. Granted, a bird in the hand is always worth two in the bush, but those who don’t take advantage of potential avenues for gain today are likely to see loss tomorrow. That bird in the hand is great, but when there are dozens of birds in the bush, it’s time to start looking outside of your hand lest competitors do that job for you.
The rise of mobile-only banks could do a lot worse than getting the self-employed trade on their side, and if traditional banks aren’t careful, a major market could slip on by.