Banks need to stand in the shoes of their small business customer

With the UK’s move to portable bank account numbers, and a seven day account switching service, some banks are expected to experience a surge in new customers over coming months. Of course the improved power of business customers to move their account to their preferred supplier also poses a real threat – banks that don’t keep up with an increasing shopping list of expectations from the small business consumer will undoubtedly lose out.

While much of the media focus relating to the seven day account switching service appears to be around technology – who has the best app, and will technology level the playing field in the banking marketplace – we look beyond that to understand what business owners really expect from their banking relationships, as we believe that businesses value these at least as much as they value technology.

The view from the other side of the counter

To really understand the financial and business needs of its customers, bank managers would do well to put themselves in the business owner’s shoes, and take a look at the world of business from the other side of the counter.

To many owner-managers of small businesses, the bank manager is what Dracula was to the inhabitants of Transylvania; at best, a pain the neck, at worst someone who will bleed them dry. It’s good news that many banks are already recognising the gulf in outlook that exists between their managers and their small business customers, and are thankfully anxious to bridge it. They are encouraging managers to seek to better understand their customers, and to form working partnerships in place of the traditional transactional relationships of the past.

What do business owners expect from their bank?

Through working with banks over many years in the UK, Australia, Europe, Africa and Mediterranean Europe, ICE has begun to get to grips with the challenges being faced by banks in engaging with the small business sector, enabling us to develop a checklist of factors that bank managers need to think about when they’re planning their communications approach. These are, in summary:

 An understanding of the day to day pressures faced by the business owner

 The importance of stable, long-term relationships

 A desire to access to the bank’s business networks

 Clear terms and conditions, with no unpleasant surprises

 Quick responses to enquiries in jargon-free language

 A thorough knowledge of local business networks to provide guidance and support

More recent research looking at perceptions of bankers from female customers in particular highlighted another layer of detail to add to this checklist. Where men tend to see the banker as a service provider and no more, women frequently view them as an important stakeholder, so expect a proactive approach and a genuine interest in their business. They aspire to work with a bank manager who is flexible, who can act as a sounding board and honest broker, and who can provide support in both good times and bad.

Why do businesses switch banks?

The last thing any bank wants to do is lose customers, however movement of business customers between banks is becoming much more common-place, and this trend is set to rise through the introduction of portable bank account numbers. So, beyond getting the technology right, what do bank managers need to do to stall this anticipated trend?

First we need to understand why businesses have tended to switch banks. Independent research suggests that these are the top five:

1. Poor service, or lack of service due to not understanding customers’ needs (49 per cent)

2. Better offerings from competitor institutions (30 per cent)

3. Unfriendly attitude (16 per cent)

4. Charges (12 per cent)

5. Inflexible attitude (11 per cent)

These findings underline how important it is for bank managers to develop empathy with their small business customers, to recognise and respond to their needs as individuals, not as institutions – in other words to deliver a personal service.

Banks and small businesses are important stakeholders for each other and they must develop a mutually beneficial relationship. Like the demise of Dracula, banks need to drive a stake through the relationships of the past and cultivate a new style of relationship based on mutual respect and understanding to help their customers to grow their small business, and to sustain relationships long-term .


This blog has been developed from an original article co-authored and published by Dinah Bennett of ICE and Tim Atterton

‘Shoes’ image courtesy of vorakorn