In our first blog we explains why brokers will play a vital role in our mission to help the UK’s SMEs thrive
2020 was a tough year for many small businesses, but there is a renewed optimism in the sector as we begin the New Year. This is especially true for us at Recognise as we open our doors to new business for the first time.
So how can we, and other SME lenders, support Britain’s small businesses as they recover from the challenges of the last ten months and help grow the country’s economy? That was a question asked posed at the FIBA Annual Conference.
FIBA it is the Financial Intermediary and Broker Association, a group dedicated to supporting and promoting the role of financial intermediaries in the UK. In particular, its mission is to help further grow the professionalism of the broker community.
The role of FIBA is crucially important because, in answer to the question posed at its conference, brokers and intermediaries will play a pivotal role in assisting lenders to support small businesses and help them prosper.
Small and medium sized companies are truly the lifeblood of Britain and our economy. They account for more than 99% of all businesses in the country, and just as importantly, they employee almost 60% of the UK’s total workforce, according to government figures. In short, if SMEs don’t succeed, the UK economy won’t succeed.
But the sad truth is that for many years those smaller firms, this country’s entrepreneurial spirt, have been badly served by the banking sector, and in most cases by their own banks. The big banks have become ever more distant from their small business customers, servicing them remotely through call centres, causing longstanding relationships to disintegrate and leaving business owners feeling they are no longer supported by the banking sector and it doesn’t understand their needs and challenges.
Thankfully, the broker community has stepped up and has taken the strain in providing SMEs with the support they need and access to the lending they want to help their businesses grow. This is borne out by the fact that in the first two months since Recognise Bank received its license and been open for business, we have already had over £140 million worth of requests for lending, mostly from brokers. They are ready to connect their clients with an SME bank that is different from the rest.
But it hasn’t been plain sailing for the broker community. Their success is as much down to their own resilience in dealing with lenders as it is their expertise in providing the support and access to funding their clients need.
As a lender we will do all we can to support brokers in providing SMEs with a more blended credit service. We must give brokers the tools they need to engage with small businesses, provide them with expert guidance, the appropriate lending solutions and assist them in onboarding their customers, turning sales leads into satisfied small businesses.
Regional accessibility is important as we know that both brokers and SMEs want to be able to do business with people on the ground that understand the local differences. This is why Recognise Bank is building hubs across the country, offering face-to-face expert knowledge backed up with the latest technology. As a new bank we are not saddled with the ageing IT that many of our traditional competitors have, so we’ve been able to select technology that makes the whole process simpler and more efficient, for both the intermediary and the end customer.
Another reason why the broker channel is so important and successful is that good intermediaries work hard to build trust with their clients. This is vital to Recognise Bank for a couple of reasons. Firstly, we want to work with good quality brokers that are professional and prioritise the needs of their customers. Secondly, as a new name in the commercial lending sector, we need the support of good brokers to represent us to small businesses, explain what we are all about and why they should choose Recognise Bank for their lending needs.
It’s another reason why we like to work with FIBA affiliates because we like the quality of its membership, the association’s code of conduct, its commitment to training and improvement and its focus on professionalism.
There are growing signs that the Banking Ombudsman is flexing its muscles and looking to increase its focus on a broader cross section of lending, potentially including the commercial sector. A particular area of interest to the Ombudsman is the issue of disclosure and the explicit link between the needs analysis of a customer, the lending recommendations they receive and the fees brokers charge, and whether the customer is receiving good value.
As a bank we have chosen to follow a fully regulated path, so it is important for us to work with good intermediaries and bodies like FIBA that also support an ethical and sustainable commercial lending sector. In short, we want to work with professionals that want to look after their customers.
Because ultimately then we will have a shared purpose, and one that chimes with Britain’s SMEs. To drive prosperity, and support the UK economy, one ambitious business at a time.