Want an insight into our banks?

Well it’s not clear yet just how much of one you’ll get but it’s fun looking!

As part of the Government’s aim to get traditional banks to up their game a newly launched “comparison” site has them rated by SMEs.

According to the British Bankers Association net lending to companies fell by £2.3bn in April to £275bn, the biggest monthly decline since last July. That great City sage Anthony Hilton, in his Evening Standard column, hit the nail on the head with this interesting thought;

“Whereas economic theory states that banks collect the savings of individuals and lend it to businesses with growth ambitions, in reality they borrow it mainly from each other and lend it to almost anyone except these businesses”

Whether your reaction to that is “ouch” or “wise words mate”, the figures continue to fall when it comes to lending to SMEs and it is this continuing trend that has prompted the Government to try yet another approach (or gimmick depending on your level of cynicism).

Same old names

The website in question is www.businessbankinginsight.co.uk and it explains its programme as examining the performance of individual banks as reported by 5,000 small and medium sized UK businesses via a telephone survey and making those findings public.

Perhaps more interesting is some of the names on its advisory group. Those offering counsel include HM Treasury, The Department for Business, Innovation & Skills, the British Banking Association and wait for it, Royal Bank of Scotland. It’s funny that despite all the soundbites and initiatives not one of them has so far been able to persuade the banking industry to up its game so it’s questionable whether they can do it collectively.

Out of the frying pan

Despite the obvious well-meaning of this new “tool” it isn’t without flaws. When the Government said it wanted to force those banks that decline loans to SMEs to refer them to alternative sources of finance the word alternative seemed key to the whole thing. What we have here is a list of high street banks, rated for various products, with not one alternative or independent finance provider amongst them.

What is also surprising is that with invoice finance being the go to product for many businesses let down by the banks its industry body ABFA has not been called on for some input despite the product being one of those subject to the rating system.

Give it time

Clearly it’s early days and one would hope that in time it might provide a real insight into performance and the real alternatives available. As it stands a brief glance at the section titled “General Business Support” reveals as few as 1 rating for some banks; hardly a wide ranging view on which to make a decision. As for highlighting alternatives it has all the capability of a Lloyd’s manager suggesting a customer nips next door to Barclays to see if an overdraft might be approved there. And if that fails HSBC is just across the road.

Independent guidance – independent finance

It seems unlikely that a body that counts a traditional bank on its advisory board, plus the association that represents all of them, will find it easy to suggest to customers that they look at the performance of the real alternatives currently funding SME growth.

Luckily for those customers, as independent brokers, we do just that and introduce SMEs to people who really do want their business.


by Steve Leeves