Research from the Current Account Switch Service finds that many London-based small and medium businesses are considering switching to banking providers that provide greater in-person services amid the tough economic climate.
The data provides insights on banking behaviours and the greatest concerns of London’s businesses. Regarding behaviours, 32% of London SME leaders worried about the future reported losing sleep when worrying about their business, higher than other major UK cities, Birmingham (26%) and Liverpool (22%).
While the owners of London SMEs are facing similar challenges to their counterparts in other cities in the UK, they have the second highest appetite for switching their accounts. Almost three-quarters (73%) would consider switching their business account if an alternative offering better met their requirements. In addition, over a third (36%) of London SMEs confirmed that they review their bank accounts on an annual basis, a higher proportion than Southampton (33%), Manchester (32%), Glasgow (31%) and Nottingham (29%).
The challenges facing SMEs in the UK amid the current economic climate have been well publicised. The spike in inflation over the past 18 months and the resultant surge in interest rates, hit consumer confidence and levels of disposable income. The knock-on effect for SMEs in London is clear, with 20% reporting that late payment from customers is one of their key challenges. As a result, SMEs have faced significant financial pressures, which have been reflected in the rising number of business insolvencies.
The most common concern among London SMEs was the rising cost of living, which 39% cited as a key challenge for the year. This was closely followed by rising costs, at 36%.
London SMEs are keen to ensure they find the banking provider that suits them best. In doing so, this supports the finding that London SMEs have a strong level of financial education with a large majority (80%) being aware of all the differences between a business and personal current account.
A quarter of SMEs in London (26%) are attracted to a bank or building society because of the services they offer, such as a business manager, financial advice or cash banking capabilities. A higher proportion than SMEs in Sheffield (24%) and Norwich (18%). This desire for financial advice is clear among London SMEs, as 29% of those who use a business account do so because their bank provides financial advice, a higher proportion than Nottingham (25%), Liverpool (15%) and Leeds (15%).
John Dentry, Product Owner at Pay.UK, commented: “Much like across the rest of the country, small businesses across London have had to adapt to an unpredictable economic landscape. This has led many to become concerned about the profitability and the survival of their business. Strong financial advice can really help London’s businesses here, something which is clearly reflected in our findings.”
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