UK SMEs swayed by smooth bank onboarding over business support features, finds GlobalData survey

A survey by GlobalData* has revealed that, when it comes to opening a new business bank account, small and micro business owners in the UK are swayed more by a bank’s simple account opening and onboarding procedures (38%) than the schemes and packages the bank has in place to help grow SMEs** (7%). The leading data and analytics company notes that this isn’t good news for traditional UK banks, which often focus their advertising on such schemes.

Jaimini Pattani, Retail Banking Analyst at GlobalData, comments: “When it comes to business accounts, traditional UK banks heavily promote add-on services. For example, the Virgin Startup and Virgin Money collaboration advertises that they can help small businesses scale and grow more quickly, while NatWest pushes its tools such as ‘business builder’ that claim to help SMEs approach ESG** and promote business growth. However, GlobalData data suggests that the onboarding process is what matters most to account holders. Traditional banks’ business account onboarding processes are known to be complex and not as transparent as those offered by fintech providers.”

GlobalData notes that the pandemic has changed the mindset of customers with personal accounts and the way in which SME account holders manage their business.

Pattani continues: “The expectations of digital banking are much higher now than before the pandemic. Consumers expect onboarding to be just as seamless and transparent as the account management process.”

The survey also revealed that access to a branch is the second highest reason (36%) why respondents chose their business account provider.

Pattani adds: “There is clearly still a need for in-person services, giving traditional banks an advantage over purely digital providers. However, given the number of branch closures we see, as well as reduced staff services, traditional banks may find they are competing much more with alternative providers—especially those with smooth onboarding and chatbots. For example, UK-based digital bank Starling offers free 24/7 UK support via its app, phone or email, with fast response times.”

To have the most impact, traditional banks need to focus on the real needs of SMEs: get the basics right (i.e., onboarding) first, then focus on add-on features.

Pattani concludes: “Creating a frictionless customer onboarding journey is the key to starting a strong customer relationship and being a part of their banking journey as SMEs start to scale and require financing.”

* 2022 UK Financial Services Consumer Survey – sample size of self-employed customers = 262

** Small to medium-sized enterprises (SME); Environmental, Social, Governance (ESG)