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SUMMARY
Finaccord's report titled Small Business Metrics: Banking for Small Businesses
in the UK is one of two flagship publications in the Small Business Metrics
series developed in conjunction with IMRS (www.imrs.co.uk). Based on an
on-line survey of 1,575 small business owners and self-employed individuals
carried out in June and July 2006, the study provides fresh and detailed
insights into the market for providing a range of business banking services to
the approximately 4.4 million businesses with fewer than 50 employees in the
UK. In addition to providing a comprehensive analysis of the results across
all respondents, the publication also breaks out the findings for key segments
in the small business market, namely: building and construction businesses;
cafes, hotels, pubs and restaurants; consumer and commercial service
businesses; logistics, motor trade and transportation businesses; I.T.
professionals; non-I.T. professionals; retailing businesses; home-based
businesses; recently-established businesses (ie. those aged three years or
less) and self-employed individuals. Furthermore, the research also provides
clear answers to key issues in the market for banking for small businesses
including their propensity to strike up relationships with more than one bank
and their satisfaction with the various services offered by the bank offering
their main business current account such as ease of contact with a business
banking manager and interest rates offered on business accounts. As such, it
constitutes the most comprehensive published source of intelligence on the
UK's small business banking market.
TABLE OF CONTENTS
0.0 EXECUTIVE SUMMARY
- Almost 60% of small businesses require at least some form of business
banking service
- The most common need is for business current accounts and business deposit
accounts
- Banking needs are often most complex in the 'horeca' and retailing small
business categories
- Most small businesses hold business deposit or investment accounts solely
with their main bank
- A significant minority of small businesses hold significant funds in their
business accounts
- Over 20% of small businesses maintain relationships with more than one
business bank
- Bank consolidation is leading to an extremely concentrated market for
small business banking although challenger banks can be more influential in
the market for secondary relationships
- Over 40% of respondents have opened their main business account during the
last three years
- Small business propensity to consider switching bank appears to have
diminished since 2006
- Abbey and Alliance & Leicester appear to have been most successful in
attracting switchers
- Discontent among small businesses is highest in relation to charges levied
on business accs and satisfaction can also be improved in the area of
personal contact with small business customers
- Membership of professional and trade assocs. is much higher than for
franchise organisations
- An important minority of commercial affinity group members use the
affinity for banking services
- Customers using smaller banks as their main provider are least likely to
consider switching bank a finding that may be significant in the context of
the trend for banking sector consolidation
0.0 INTRODUCTION
- Research rationale
- There are around 4.66 million enterprises with fewer than 100 employees in
the UK
- Using conventional techniques, the small business audience is tough to
research although the Internet methodology helps to circumvent many of the
usual problems
- The market for small business financial services is subject to rapid change
- Research sample
- The Internet research methodology is characterised by more advantages than
drawbacks including the fact that small businesses have more time to provide
accurate responses
- Finaccord
- The Small Business Metrics series
- UK consumer research publications
- UK affinity and partnership marketing publications
- IPT / Tpoll
2.0 BANKING OVERVIEW
- Introduction
- Requirement for any form of business banking service
- 'Horeca' businesses are jointly the most likely to require business
banking services
- Frequency of usage of different forms of business banking service
- Overview
- 60.2% of all small business banking customers report a need for a business
deposit account with over 50% also making use of business credit cards and
business overdraft facilities
- Specific business banking services
- Usage of business banking services varies dramatically by category of
enterprise
- Business deposit / investment accounts: choice of bank
- Most small businesses hold deposit or investment accounts with their main
business bank
- Value of funds held in all business current / deposit / investment accounts
- A significant proportion of business banking customers hold liquid funds
in excess of
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