Business Banking: State of the Nation
— Business MoneyFebruary 2012- Business Money
When I first entered banking customers could have the names of payees typed from their cheques and placed upon their bank statement along with details of standing orders.The passage of time and cost constraints saw the service diminish in this respect though it was the late 1980s and 1990s that saw radical change. Branches were stripped of seasoned personnel and became little more than cash counters and sales centres.
Business centres were located in some of them which made for sensible use of resources as far as the banks were concerned though not always the customers.
And if one of the biggest culture shocks of my life was ceasing to be a banker and becoming an SME owner, the second was the day the local branch of my bank wanted me to telephone a call centre with any queries as they could not deal with them.
That the call centres were sometimes located on distant shores added to the feeling of detachment, one not helped by some of the desperate lack of knowledge regarding basic banking matters. Worse was the feeling that no longer did anybody really care about me and my business and that I was on my own.
It seems like a period in the wilderness now because the banks have utilised technology brilliantly to offer services today that are much better than the old fashioned ones about which so many wax lyrical.
Certainly there is more self help but you have control over so much more too.
My bank statement once again has every entry specified apart from credits paid in with cheques in them and they are becoming ever fewer as electronic payment becomes universal.
My travel and subsistence expenses are recorded on my debit card, I can set and cancel standing orders. I can access my account at any time and make payments, most of which will arrive in the recipient’s account in moments.
I can order currency to be delivered to my home, I can open savings accounts. There is little I cannot do. My business manager is accessible by mobile phone and e-mail, you no longer feel isolated.
My NatWest account allows payments to be made without requiring a key card having once employed it to enter the payee’s details. Cheques paid in are available as cleared funds in two days. Having endured many years of frustration, all of the major banks offer very similar service. They have to. Life is very competitive in business banking today.
And whilst the travails of the old Allied Irish Bank may have dented the reputation it acquired by winning several Forum of Private Business reviews of business banking I hope it bounces back. Ireland is making heroic efforts to sort out the problems inflicted by the euro and its one size fits all interest rate.
Handelsbanken has picked up the banner for old fashioned personal service levels in the business sector but I suspect it chooses the accounts it takes on very well.
I have a passion for the SME sector. It provides that entrepreneurial and abrasive spirit that instills efficiency and tight price controls at the lowest part of the business spectrum that influences everything throughout the whole UK economy. Competition is at its heart.
What is more, a successful small business creates much economic activity as busy entrepreneurs require builders, gardeners, cleaners, not to mention their support of restaurants, golf clubs, garages and nurseries. The private sector spends money far more efficiently than the public sector and it demands efficiency and competitiveness in return. And it is competition that drives our providers of business banking to seek our business. The activity is profitable from their point of view.
So which banks manage SME accounts today, which bank has what market share?
I have isolated individual banks though The Royal Bank of Scotland could be paired with NatWest and HBOS with Lloyds. It should also be remembered that both combined entities are selling branches under direction from the European Commission. The Royal Bank of Scotland is selling to Santander and Lloyds Banking Group is to sell to Co-op Bank so the numbers I am quoting will change over the coming years as the tortuous process gathers momentum.
Clearly the combined RBS/NatWest operation is the UK’s biggest business banker.
What about the start-up market? How have the challenges faced by some banks, especially those where the government has a large stake, affected their appeal? The numbers are revealing.
I accidentally discovered one reason for Barclays’ success when incorporating a company on the internet. As I came to the end of the process I was offered the chance to open an account with Barclays on the spot. In addition, Barclays has been making by far the most bullish noises in the space. HSBC has, I suspect, remained very choosy as to the business it takes on.
Santander looks to be holding its own but the other big names have had the blight of a big government stake hanging over them and this may not encourage all of an entrepreneurial bent.
That said, I opened accounts with two of them in the last year and found the process, the money laundering protocols notwithstanding, fast and friendly.
I am not covering loans to business in this review though a high percentage of requests are being met.
Where the SMEs of the UK are apprehensive as to the future is demonstrated by the £70bn they collectively hold on deposit. That they are prepared to accept a negative return given the inflation rates we are experiencing is an indictment of the mood of the day.
Confidence is low, the euro’s issues blight everything, high personal tax rates do not encourage our entrepreneurs to bust a gut with new initiatives. There is something morally reprehensible about parting with 50%, or more, of the money your hard work has earned.
The teachings of Laffer are completely lost upon those of a terminally Liberal disposition and the new jobs that might be created by a successful person are not.
The latest government
figures remind us that there are 4.5 million SMEs in the UK, employing 23.4
million people and generating £3,100bn of sales. How right the Forum of Private
Business was to
lambast HMRC when all it can do to justify the feather bedded existence of most
of its wage slaves is to launch compliance raids on the sector to make certain
that returns are being filed properly.
The banks of the UK recognise only too well the importance of the SME sector. Support a winner and the bank’s business grows with it.
The gradual demise of the cheque means that banks must make access to accepting card payments easier, even if only debit cards that carry a much lower residual liability should the business fail.
But mobile phone payments are moving ahead fast so who knows what the future may hold?
The UK SME owner-manager has a wide range of banks from which to choose though the proximity of a local branch, whilst not as important as it once was for day-to-day business, is still helpful.
Whether it will be a branch of the bank you signed up with though may be something to be watched.
I for one could not buy into all of the Co-op Bank’s philosophies it seeks to impose on its customers. Any effort to inflict the constraints of its ethical committee, and the ethics are very subjective and politically inclined here, on a proposal of mine would attract a response of a robust persuasion. Just because the European Commission says that your bank has to sell you to the Co-op Bank does not mean that you have to go.
On the other hand you may welcome deeper involvement with such an institution.
As I said earlier, the business owner of the UK has an immense choice of very high quality banks from which to choose.
© Business Money 2012 Ltd
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In This Issue
-
The Year That Was - Editorial Board Review of 2011
BCR Factorscan -
China: Against All Odds
Global Trade Review -
Hopes in Emerging Countries
Financial Times -
Business Banking: State of the Nation
Business Money
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