Expectations of business banks have heightened since the pandemic hit in 2020 and financial providers will need to be much more creative in meeting SMEs’ needs, according to a new report from RFi Group.
The survey found that SME concerns over the next 12 months reflect the results of an uneven ‘recovery’ from the pandemic and the opportunities they see for the rest of 2021. Strikingly, while 50 percent of small business owners interviewed were aiming to improve efficiency, almost the same proportion anticipate growth over 2021, the report said. The latter group was largely driven by start-ups run by millennials,
Overall, small business owners have felt very supported by their business bank throughout the pandemic. 1 in 2 SMEs believe their business bank has done the best it can to support its customers through 2020 Expectations of a business bank have also evolved through the pandemic, and the bar has been raised - more than 50 percent of business owners hold higher expectations of their bank today than they did before the pandemic, said the report’s authors.
The report found that expectations of a business bank have elevated due to experiences in 2020; financial providers will need to be more creative in meeting SMEs’ needs in 2021 - with a solid 46 percent of respondents demanding a wider range of services.
Around 54 percent of the small business owners interviewed believed their business bank has done the best it could to support its customers through 2020. A sold 61 percent of respondents felt supported by ANZ. That figure dropped to 58 percent for the regional banks and 58 percent for Commonwealth Bank, 50 percent for National Australia Bank, and 48 percent for Westpac.
Banks could do more
Yet, despite positive feelings of support through the pandemic, SMEs are significantly less likely to say the same today, according to the report. The number of respondents who felt their business bank had done as much as they could to help them slipped from 42 percent to 39 percent since last December.
“Moving forward, it will be critical to acknowledge the heightened expectations that SMEs hold of their business bank,” RFi analysts said, adding that flexibility with loan repayments is paramount for SMEs followed by the importance of replicating the benefits of face-to-face customer service in a digital setting.
“Shifting expectations are backgrounded by a tumultuous 2020 that saw financial institutions play a central role in the economic recovery and businesses’ survival,” said RFi.
“In 2021, a business bank is expected to be more than what it was pre-pandemic; ‘flexibility’ also begins to encompass more than just repayment flexibility."
Aside from better rates and lower costs, RFi found that businesses most likely to switch banks in the next twelve months are those that need greater flexibility from their business bank as well as access to credit and a wider range of products. A solid 36 percent of small business owners were looking for better rates and lower costs compared to 23 percent of the market A further 26 percent wanted advice and support compared with 14 percent of the market.
“With feelings of support diminishing since December 2020, addressing SMEs’ needs in 2021 will primarily require flexibility with pricing and business banking services more generally,” the report found.
“In doing so, banks also need to find the balance between in-branch service and digital self-servicing, while keeping in mind that SMEs expect more than just financial support today - strategic/business-based advice is increasingly wanted in the ‘recovery’ phase of the pandemic.”