As the going gets tough, banks missing the mark say UK SMEs & consumers

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Over half of UK SMEs (52%) are reassessing their bank’s suitability for them, according to new SAP research. Similarly, less than a quarter (22%) of UK consumers are currently satisfied with their bank’s support, suggesting the moment for change is now.

In a survey of 2000 consumers and 500 senior decision makers within the UK’s growing SME’s cohort, SAP reveals interesting insights into customer banking behaviours to help banks and financial services providers pivot from a one-size-fits-all approach to customer experience, and deliver bespoke, targeted solutions.

In times of high personalisation and “Digital everywhere” – Banks need to think differently and create a stronger empathetic relationship with their consumers. It’s time to understand better, be more proactive and communicate / engage better.

A closer look at segment insights 

SAP’s research looks at how gender, age, business type and turnover determine the variety of attitudes and behaviours customers have towards financial services.

In sync with societal changes where gender plays an increasingly important factor in the way products and services are consumed, banks need to rethink their go-to- market strategies. There are marked gender differences in how customers work with their bank. For example, almost one fifth (19%) of females check their account after every transaction (compared to just 14% of males). Females are also almost three times less likely to have moved money from online-only providers to high-street banks (11% of males vs 4% of females).

The emerging call is that of ‘gender relevance’ – therefore an opportunity for banks to relook at their products and messaging to ensure gender relevance and to address different needs and behaviours.

Age too determines banking behaviour as customers look for different financial options and services based on digital and financial maturity. Baby Boomers, those aged 55 and over, are more than twice as likely to switch provider based on sign-up offers and better interest rates compared with Gen Z audience (36% vs 16%). Meanwhile, appetite to adopt digital services paints a different picture. Almost a quarter (24%) of Gen Z have switched their bank in the last year based on digital experiences – while less than one in 10 (9%) of Baby Boomers have done the same.

“The message from UK banking customers is clear – providers are failing to deliver the personalised services and support and this is breeding dissatisfaction. The time is now for banks to hit the re-set button and ditch the one-size-fits-all approach to targeting and recognise each segment acts and behaves differently,” explains Anuj Kumar, Industry Strategy and GTM lead for Financial Services at SAP, UK.

It’s a similar story for SMEs with turnover influencing banking behaviours and engagement. Businesses that turn over between £100m and £499m are almost twice as likely to be reliant on their bank for support and guidance during the cost-of-living crisis than those that generate between £10m and £49m each year (61% vs 37%).

Consequently Michael Walsh, Head of Financial Services, UK, suggests “SMEs are key to the growth of UK. Banks need to re-think how they engage with the SMEs. Size, experience of the executive, industry and the SME’s own growth ambitions are significant factors driving how they use the Financial Services sector. Typically focus has been on working capital (financing, lending, overdrafts). With the ever-increasing digitisation of capabilities, bank’s need to re-think how they serve SMEs. Future focus has to be about support to help SMEs access new customer bases with collaborative ecosystem and networks leveraging emerging intelligent platform technologies.”

Seeking personalised education and support 

SAP’s survey also reveals that UK banking customers, whether SMEs or consumers, are calling for greater personalised education and support to offset economic concerns.

On average, 1-in-5 (20%) of consumers call for better and easier access to support, education and digital tools amidst current economic pressures. Age once again plays a key role here with Gen Z (20%), Millennials (23%) and Gen X (20%) calling for their bank to deliver guidance on where to access support when things go wrong. Fewer than one in 10 Baby Boomers make the same demand.

Gender also informs calls for greater education. Females are twice as likely to (21%) ask for their bank to post more online content with tips and advice, compared to males (11%). While both men and women place equal demand on interest rates support and education (16%) and the development of accessible budgeting tools (16%).

Similarly, UK SMEs are equally clear on where banks need to deliver education and support. Over half (53%) of companies that turnover between £100m and £499m want to be informed on where they can access lending and funding options, while four in 10 (43%) of much smaller companies, generating between £100k and £999k, would like more communication and advice on where to access support when things go wrong. SAP’s survey also finds that over half (60%) of companies sized between £50m and £499m would like their bank to invest in additional analytics and automation to help drive new insights and streamline their operations.

“Customer first is the call of the hour. Banks need to accelerate adoption of digital capabilities but in doing so need to ensure that they can communicate enhanced value and experience to the end consumer, both retail and SME groups. With new technologies including AI enabling new ways of doing business, limitations of current architectures can no longer be the excuse to decelerate innovative disruption.” admonishes Michael as a key takeaway.

And Kumar concludes: “In times of financial strife, it’s the responsibility of banks to listen and respond to their customers, upgrading their support from both an educational and technology standpoint. Customers demand constant, proactive engagement and reassurance across multiple channels, with content that educates, digital tools that empower smarter financial choices, and advice that’s readily accessible and on-demand. That’s the modern banking experience that the UK has come to expect, and financial services must keep up or get left behind particularly in an era that is seeing a growth in alternative banking service providers.”