Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Balances are forecast to rise above £150bn by 2023
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- Figure 1: Forecast of small business account balances (current and savings accounts), 2013-23
- Lending volume continues to fall
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- Figure 2: Annual number of loans and overdrafts approved for small businesses, 2013-17
- Companies and brands
- The big five account for 80% of small business bank accounts
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- Figure 3: Market share for business bank accounts, June 2018
- Open Banking can improve access to small business lending
- The consumer
- Two thirds use a specialist business bank account
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- Figure 4: Type of bank account used to manage business finances, June 2018
- Poor customer service is the biggest prompt to switch
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- Figure 5: Factors that would encourage small business owners to switch business account provider, June 2018
- Online banking the most used channel
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- Figure 6: Channels used to carry out various business banking activities, June 2018
- The majority feel their business loan application would be approved
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- Figure 7: Chances of business loan approval, June 2018
- 40% are looking to develop their business
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- Figure 8: Business owners’ plans for their business’ finances over the next two years, June 2018
- Only a fifth will consider opting in to Open Banking
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- Figure 9: Small business’ interest in open banking, June 2018
- Almost 30% do not trust their bank
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- Figure 10: Attitudes towards business banking, June 2018
- What we think
Issues and Insights
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- Banks must regain trust before Open Banking can make its mark
- The facts
- The implications
- Alternative lenders can reinvigorate the market
- The facts
- The implications
The Market – What You Need to Know
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- Balances are forecast to rise above £150bn by 2023
- Lending volume continues to fall
- Small business share of private sector grows
- 85% of small businesses’ finances are ‘Healthy’ or ‘OK’
- Small businesses can use Open Banking to get ahead
Market Size and Forecast
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- Number of overdrawn accounts ends decline
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- Figure 11: Number small business current accounts, by in credit and overdrawn, 2013-17
- Savings accounts decline for the second year running
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- Figure 12: Number and value of small business current and savings accounts, 2013-17
- Balances are forecast to rise above £150 billion by 2023
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- Figure 13: Forecast of small business account balances (current and savings accounts), 2013-23
- Figure 14: Forecast of small business account balances (current and savings accounts), 2013-23
- Forecast methodology
Small Business Lending
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- Consistent growth in value of small business loans
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- Figure 15: Annual value of gross loans advanced and overdraft facilities approved for small businesses, 2013-17
- Lending volume falls once again
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- Figure 16: Annual number of loans and overdrafts approved for small businesses, 2013-17
Market Drivers
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- Smaller companies dominate the UK business population
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- Figure 17: UK business population, by business size, 2013-17
- Small businesses influence grows
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- Figure 18: Share of UK private sector turnover, by size of business, 2015-17
- Number of self-employed begins to fall
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- Figure 19: Number of self-employed workers in the UK, January 2013-March 2018
- 85% of small businesses’ finances are ‘Healthy’ or ‘OK’
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- Figure 20: Current financial situation of the business June 2016 vs June 2017 vs June 2018
Regulatory and Legislative Changes
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- Small businesses can use Open Banking to get ahead
- Ring-fencing initiative takes centre stage
- FCA looks to tackle peer to peer investing
- MPs launch enquiry into SME exploitation
Companies and Brands – What You Need to Know
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- The big five account for 84% of small business bank accounts
- Barclays doubles unsecured lending limit to SMEs
- Open Banking can improve access to small business lending
- Business banking advertising falls by over 20%
Market Share
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- Barclays accounts for around a fifth of small business bank accounts
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- Figure 21: Market share for business bank accounts, June 2018
Company Profiles
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- Barclays
- Profile
- Recent activity
- Santander
- Profile
- Recent activity
- RBS Group
- Profile
- Recent activity
- HSBC
- Profile
- Recent activity
- Lloyds
- Profile
- Recent activity
New Innovations
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- Open Banking can provide better access to credit
- New current account providers can help in financial planning
Advertising and Marketing Activity
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- Business banking adspend declines for the second year running
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- Figure 22: Total above-the-line, online display and direct mail advertising expenditure on business banking services, 2013/14-2017/18
- Top five banking groups make up only a quarter of adspend
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on business banking services, by brand, 2013/14-2017/18
- Digital advertising falls
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- Figure 24: Share of total above-the-line, online display and direct mail advertising expenditure on business banking services, my media type, 2017/18
- Credit products the priority for Lloyds and Natwest
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- Figure 25: Share of total above-the-line, online display and direct mail advertising expenditure on business banking services, by product type, at major high street banks, 2017/18
- Large Banking groups focus more on wider brand building
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Two thirds use a specialist business bank account
- Poor customer service is the biggest prompt to switch
- Online banking the most used channel
- The majority feel their business loan application would be approved
- 40% are looking to develop their business
- Only a fifth will consider opting in to Open Banking
- 29% do not trust their bank
Business Bank Account Ownership and Tenure
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- Almost 70% use a specialist business bank account
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- Figure 26: Type of bank account used to manage business finances, June 2018
- Less than half of one-person businesses own a business account
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- Figure 27: Type of bank account used to manage business finances, by number of employees, June 2018
- 70% have been with their provider longer than five years
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- Figure 28: Business bank account tenure, June 2018
Prompts to Switch
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- Customer service the most important factor
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- Figure 29: Factors that would encourage small business owners to switch business account provider, June 2018
- Push factors more influential
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- Figure 30: Factors that would encourage small business owners to switch business account provider, by number of employees, June 2018
Business Banking Channels
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- Online banking the most used method
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- Figure 31: Channels used to carry out various business banking activities, June 2018
- Mobile banking more popular among younger businesses
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- Figure 32: Use of mobile banking services when carrying out business activities, by age of business, June 2018
Attitudes towards Business Borrowing
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- Two thirds believe their business loan application would be approved…
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- Figure 33: Chances of business loan approval, June 2018
- …but one-person businesses are less confident
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- Figure 34: Chances of business loan approval, by number of employees, June 2018
- Low interest rate the most important factor
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- Figure 35: Interest in business loan features, June 2018
- Case study: Barclays takes minority stake in FinTech financing platform MarketInvoice
Short-term Future Plans
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- 40% are looking to develop their business…
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- Figure 36: Business owners’ plans for their business’ finances over the next two years, June 2018
- But micro business owners are less likely
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- Figure 37: Business owners’ plans for the business’ finances over the next two years, by number of employees, June 2018
Attitudes towards Open Banking
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- Only a fifth interested in Open Banking…
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- Figure 38: Small business’ interest in open banking, June 2018
- But newer businesses more likely to be tempted
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- Figure 39: Small business’ interest in open banking, by business age, June 2018
- Personalised offers the key incentives
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- Figure 40: Interest in features which would encourage data sharing, June 2018
Attitudes towards Small Business Banking
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- Two thirds concerned about the prospect of data sharing…
- …while 29% do not trust their bank
- Opportunities for new challengers
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- Figure 41: Attitudes towards business banking, June 2018
- Almost a third are concerned by Brexit
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 42: Best-and worst-case forecasts for small business account balances (current and savings accounts), 2018-23
- Forecast methodology
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