28th May 2014
A "ground-breaking" new website has been launched that aims to enable small businesses to compare the performance of over 70 UK banks, in a bid to restore trust and increase competition.
The Treasury-backed Business Banking Insight (BBI), driven by the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC), aims to help small firms make more informed decisions by allowing them to see how banks are rated by other businesses.
BBI, which was announced by chancellor George Osborne last November, ranked 74 banks in total, based on research conducted with over 5,000 businesses, consisting of sole traders, those with one to nine employees and those employing 10-249 staff.
The research showed overall customer satisfaction levels, using a five-star rating system, against five key factors: Transparency, tailored services, value, availability and keeping customers informed.
According to the research, sole traders gave over half of the reviewed banks a three-star rating or below for credit approachability.
Further results revealed that small businesses employing one to nine people need tailored services but are having difficulty accessing them, while they gave more than half of the total number of ratings 3.5 stars or below.
For business current accounts, sole traders and business with one to nine employees gave banks an average satisfaction score of 60%, rising to 65% for those employing 10-249 people.
With regards to lending, 85% of respondents had not approached a bank to apply for credit in the previous 12 months.
John Allan, FSB national chairman, said that while the results show that some banks are performing well, there is “still work to be done” in many areas.
“Most important of these are to restore trust, increase transparency and to offer a better value for money proposition to their small business customers.”
He also remarked that the BBI should help to boost competition in the market, as businesses become more aware of the products and services available, as well as the new challenger banks.
“Another big win we expect is for the banks to use these results to up their game and work harder to support their business customers’ ambitions,” he added.
Osborne said the research provides SMEs with a “clear and credible” way to rate how their bank compares to its competitors.
“A key part of our long term economic plan is increasing competition and choice in banking, and ensuring Britain’s SMEs get the best possible service from their bank. This new survey will be a powerful tool for these businesses, providing them with the means to see who’s up for the challenge and who isn’t.”
The initiative is being supported by an advisory group that includes the British Bankers Association (BBA), Royal Bank of Scotland, Department for Business, Innovation & Skills and the Competition and Markets Authority.
Anthony Browne, chief executive of the BBA, said that the website will help banks to pinpoint where improvements may be required.
“It is great that the newer and smaller banks are included as well as the established brands which just shows how many different institutions there are out there competing for new customers.
“Whether large or small, every bank will want to be at the top of these ratings so this can only help spur competition between banks leading to even more innovation, new products and better service for businesses.”
The research will be repeated every six months, with all findings displayed on the BBI website.