Table of Contents
Executive Summary
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- The market
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- Figure 1: Forecast of value of small business current account and savings account balances, 2010-20
- Companies and brands
- Major banks dominate the market
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- Figure 2: Bank where business bank account is held, March 2015
- Adspend fell in 2015 but remained focused on brand building
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- Figure 3: Recorded above-the-line, direct mail and online display business banking adspend, by product category, 2011-15*
- The consumer
- 71% of business owners have a business bank account
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- Figure 4: Type of bank account used to manage business finances, March 2015
- Most business owners are satisfied with their bank
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- Figure 5: Satisfaction with business banking provider, March 2015
- Online services are key but branches are still important
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- Figure 6: Use of business banking features in the last three months, March 2015
- One in 10 think they’ll switch provider in the coming year
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- Figure 7: Switching intentions, March 2015
- Most business owners have a business credit card
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- Figure 8: Ownership of other business banking products, March 2015
- 83% of business owners think they could get credit if they needed it…
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- Figure 9: Confidence in obtaining credit, March 2015
- …but most believe borrowing should be easier to get
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- Figure 10: Attitudes towards small business lending, March 2015
- There is more faith in banks to help in good times than in bad
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- Figure 11: Attitudes towards business banking, March 2015
- What we think
Issues and Insights
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- Satisfaction may be high, but trust is low
- The facts
- The implications
- Banks need a new approach to self-employed workers
- The facts
- The implications
The Market – What You Need to Know
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- 17.5% growth in business current account balances
- The UK small business population is at record levels
- Regulation could threaten the industry giants
- Lending to small businesses remained steady in 2014
Market Size and Forecast
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- Modest growth in the number of small business current accounts…
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- Figure 12: Number of small business current accounts, by type, 2010-14
- …but an impressive rise in balances
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- Figure 13: Number and value of small business current and savings accounts, 2011-14
- Market forecast
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- Figure 14: Forecast of value of small business current account and savings account balances, 2010-20
Market Drivers
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- The UK has a record number of SMEs…
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- Figure 15: Volume of UK private businesses, 2010-14
- …driven by more self-employed workers than ever before
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- Figure 16: Number of self-employed workers in the UK, 2010-15
- SMEs have a combined turnover of more than £1.65 trillion
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- Figure 17: Total annual turnover of UK private businesses, 2014
- Financial wellbeing among business owners is on the up
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- Figure 18: Current financial situation of the business, October 2013 vs March 2015
- CMA investigation poses a potential threat to the big four
Small Business Lending
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- Lending to small businesses stayed flat in 2014…
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- Figure 19: Quarterly value of gross loans advanced to small businesses, Q3 2011-Q1 2015
- …while overdraft use continued to fall
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- Figure 20: Quarterly volumes of approved loans and overdraft facilities for small businesses, Q3 2011-Q1 2015
The Key Players – What You Need to Know
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- A highly concentrated market
- Banks focus on higher lending and better service
- Lloyds dominates recorded adspend, which is focused on brand building
Market Share
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- Top four banking groups hold 79% of small business accounts
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- Figure 21: Bank where business bank account is held, March 2015
- Challengers could be about to receive a boost
- Challenger banks are ready to move in
Competitive Strategies
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- “The lending bank”
- HSBC
- Barclays
- Lloyds Banking Group
- RBS Group
- “The helping bank”
- HSBC
- Barclays
- Lloyds Banking Group
- RBS Group
Brand Communication and Promotion
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- Adspend fell in 2015, but remained focused on brand building
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- Figure 22: Recorded above-the-line, direct mail and online display business banking adspend, by product category, 2011-15*
- Specialist lenders have increased marketing activity in recent years
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- Figure 23: Recorded above-the-line, direct mail and online display business banking adspend, by brand, 2011-15
- Lloyds dominates recorded brand and business current account adspend
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- Figure 24: Recorded above-the-line, direct mail and online display adspend on business bank brand building and business current accounts, by major high street banks, 1 March 2014-28 February 2015
The Consumer – What You Need to Know
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- Seven in 10 small businesses use a business current account
- Traditional channels still have a major role
- Switching is rare
- The scope for growth in cross-selling is vast
- Most have not needed credit, but are confident they could get it
- Banks are not trusted to look after customers in bad times
Business Bank Account Ownership
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- Seven in 10 business owners use a business current account
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- Figure 25: Type of bank account used to manage business finances, March 2015
- Half of sole traders use personal bank accounts
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- Figure 26: Type of bank account used to manage business finance, by size of company (number of employees), March 2015
Use of Business Banking Services and Satisfaction
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- Web services are key…
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- Figure 27: Use of business banking features in the last three months, March 2015
- …but traditional facilities retain importance
- The personal touch is appreciated
- Most business owners use a range of services…
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- Figure 28: Repertoire of use of business banking features in the last three months, March 2015
- …and are satisfied with their bank
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- Figure 29: Satisfaction with business banking provider, March 2015
Switching Experience and Intentions
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- Most small businesses have had long relationships with their bank…
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- Figure 30: Length of time business bank account held, March 2015
- …but 9% think they will switch account in the next year
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- Figure 31: Switching intentions, March 2015
Other Business Banking Products Held
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- Cross-selling opportunities are being missed…
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- Figure 32: Ownership of other business banking products, March 2015
- …but harnessing satisfaction levels could change this
- Half of small businesses don’t have a savings account
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- Figure 33: Ownership of business savings account, by current financial situation of the business, March 2015
Lending Experience and Awareness of P2P Lending
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- Three quarters of small business owners have had no need for lending…
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- Figure 34: Small business lending experience in the last three years, March 2015
- …while a fifth have borrowed funds in the last three years
- 16% of applicants have been rejected
- Confidence in obtaining credit is high
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- Figure 35: Confidence in obtaining credit, March 2015
- Harder for smaller businesses?
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- Figure 36: Confidence in obtaining credit, by number of employees, March 2015
- Peer-to-peer lending has high awareness but low use
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- Figure 37: Experience of peer-to-peer lending, March 2015
- Fear of the new?
Attitudes towards Business Banking
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- Banks are seen as happy to help in good times, not so much in bad
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- Figure 38: Attitudes towards business banking, March 2015
- Recommendations can make banks stand out from the crowd
- Consumers are a barrier to competition
- More help from everyone…
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- Figure 39: Attitudes towards small business lending, March 2015
- …but should you need it?
Appendix – Panel Composition
Appendix – Market Size and Forecast
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- Figure 40: Best-and worst-case forecast of small business current account and savings account balances, 2015-20
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