SME’s Are Losing Out Leaving Cash in the Bank
Small businesses are benefiting from an increase in bank approval rates, according to research from BiZ2Credit. It reports that 25 per cent of SME loan applications at large banks were approved in October.
This is an improvement from the dismal post-recession statistics when the large banks approved only one-tenth of the total SME loan applications they received. Increasing levels of awareness about the range of products and alternative finance providers now mean business owners can make a choice about funders.
The data also shows that entrepreneurs are seeking alternative finance because it’s a faster route to finance and the speed of accessing cash is critical to small business owners. The timescale of an approval is a major factor behind the decision to seek working capital via alternative lenders or credit cards. The Reliant Funding’s “November Small Business Report” indicates that 12 percent of SMEs are aware of alternative lending and have used it with three out of five saying that they chose this method because it provided financing right away.
The high street Banks are upping their game on digital transformation but many analysts say it is too little too late. Julien Courbe, lead partner for the financial services advisory PwC says “To become a digital business, you need to digitize back-end financial processes, including credit scoring, underwriting, investment management, transaction processing, and claims processing.”
Many of the large banks are looking at digital transformation but changing back office processes is a slow and expensive undertaking because they are hindered by legacy systems. Unless the high street banks evolve quickly their current model is not going to survive transformation and the level of customer expectation that consumers have today. It is essential for banks to provide a faster and more efficient experience and distribution channels for their products.