SME banking customers unhappy, but banks don’t know it yet

A study of the relationships between small and medium enterprises and their banks has revealed a large gap – while banks think they provide terrific service, their customers are left wanting.

According to a survey of 400 SME owners and/or managers, SMEs generally believe:

• Banks do not understand entrepreneurialism or business.
• Bankers are not readily available.
• Bankers do not offer sound banking advice and only make contact when there’s something in it for them.
• Bankers are interested in selling products – not relationships.

Author Ian Freeman, partner of Non Executive Management, says banks tend to point to their product range, look at their profits, and think they are doing a good job despite not really understanding business.

He argues an attitudinal change is required.

“One of the great problems that customers have is product flogging; it really irritates people,” Freeman says.

“Until one of the banks breaks the mould, they’ll probably continue to operate as they do now: focused on shareholder returns, income and bonuses.”

The report concludes if business banks focus upon customers’ issues rather than their own, they stand to significantly increase value to both SME customers and themselves.

“If business banks apply primary understanding of customers’ goals rather than their own, they stand to become more relevant to SMEs and gain increased business via less effort,” the report says.

The survey found the top five things sought from clients are unmet, despite business bankers largely stating they are supplying them.

The top five requirements of SMEs from their banks were:

• Providing understanding and support when needed.
• Being available.
• Offering good advice.
• Being interested in long-term relationships.
• Understanding key growth drivers and tailoring products accordingly.

The survey, entitled Seeking Synergy in SME Financing, found 29% of respondents agreed their business bankers met their first requirement. But their business bankers didn’t agree: between 73% and 86% said they provided understanding and support when required.

Similarly, while 33% of SMEs said their business banker was readily available, whereas between 87% and 92% of business bankers agreed.

Worryingly, just 2.2% of customers agreed their bank offered sound and constructive banking advice and just 4% agreed that their bank understands the key drivers of growth of their business and tailors products accordingly. On both measures, a majority of business bankers agreed.

Thirty-one percent of SME customers agreed their business bank was interested in a long-term relationship, versus business bankers of between 80% and 93%.

Interestingly, there is a gender gap too: women were more likely to report dissatisfaction then men, with no women prepared to say their bank offered sound advice or tailored products appropriately.

Freeman says this is shown in surveys worldwide.

“Comments were made that bankers didn’t take women as seriously as men,” Freeman says.

It also showed that microbusinesses were most likely to report satisfaction, followed by corporates, with small businesses of between $5 and $20 million in revenue most dissatisfied.