Challenger banks make reputational gains in business banking
Celent analyst Kieran Hines said Starling has focused quite heavily on the quality of its SME offering and is beginning to reap the rewards of that. “They’re not alone, though, and there is a growing sense of urgency about the need for established banks to strengthen their own offerings,” he added.
Hines said SME customers are challenging for banks to serve, because the needs of businesses will differ hugely depending on factors such as the sector, size and strategy of each one.
“Established banks have traditionally struggled to meet the specific requirements of this customer group, and banking services are only one portion of the range of different services and tools that a business requires to run,” he added. “In effect, this makes the SME segment a big opportunity for the providers that can get the model right.”
Hines said that over several years, the quality of the service offerings for SMEs from non-bank providers has continued to improve. “Quite a few of these are beginning to move towards offering services that encroach on the territory traditionally offered by banks,” he said. “Open banking has helped to accelerate this, but it was a trend that was already in motion.”