Good SME banking is simple – know your customer and give great service

By Jason Oakley, CEO of Recognise

I am not what you would call a typical banker. As I was discussing recently with BizVision’s Malcolm Gallagher on his Meet the Leaders vodcast, I’m both an entrepreneur and a banker. You might say business is in my blood. My father was a carpenter by training, but set up his own double glazing and building business. From a young age I saw him managing cashflow, meeting payroll, dealing with VAT returns and wading through red tape. During my 35 years in financial services, I myself have set up and sold three businesses, so I’ve had experience of these challenges, too.

This means I can relate to the pressures business owners encounter every day and, along with our team, have shaped Recognise, our new bank serving the SME community, accordingly. Malcolm pointed out what we all know – too many SMEs have little or no support from their banking provider. Recognise’s mission is to acknowledge our customers’ needs and put them at the heart of what we do. Hence our name. The SME sector – from sole traders through to larger firms – need proper service, pure and simple.

On the lending side of our business, we’re focussing only on SMEs, helping to fill the current funding gap. On top of this, we will offer deposits for small and medium-sized businesses and, while the SME market remains our main focus, we will also serve retail customers looking to deposit money. And while it may seem odd launching a new bank during a global pandemic, in many ways the need for what we’re doing has never been more pressing. It’s clear we’re entering another difficult economic period due to the effects of Covid-19. The large banks are already announcing job losses and restructuring. As I warned Malcolm, it is the customer who will be forgotten in all of this.

Businesses will need a decent supply of credit to get through the tough years ahead. We need bankers who are in the community to help their clients. It may sound evangelical, but I really believe this is Recognise’s cause – serving the business customer. SMEs are the backbone of the UK economy. They make up more than half of gross domestic product, they represent 99 per cent of all employers and more than 60 per cent of all employment. Who’s shouting for them? No one at present, but that’s about to change.

When you ask a business owner what they want from their bank it’s very simple. They’re not interested in gimmicks and free gifts. The single most important thing is continuity of relationship. You have to give value for money and transparency, but relationship is everything. Malcolm complained that his own experience of small business banking in recent years has been a parade of relationship managers who are increasingly hard to reach. A business wants a known, trusted point of contact who is accessible. And a relationship is there for the good times and bad. When a business owner needs support the most, the bank should be there to help.

The economic crash of 2007 was devastating in many ways, but one negative side effect was the erosion of expertise within banks in the SME sector. The big banks still have more than nine out of ten SME current accounts and about 75 per cent of the small and medium-sized business debt market. Yet, good, profitable businesses now find themselves forced to communicate with their banks through call centres, having no dedicated relationship manager.   

The message I was most keen to relay to Malcom was that Recognise wants to do things differently. We want to get under the skin of an enterprise, to understand its motivations, ambitions and how we can help it realise its potential. What could be more simple? Banking is no different to any service business – understand your client; be accessible, creative and responsive; and, yes, give a great service. Getting those elements right is the way to build and, importantly, deserve a good reputation. I sincerely hope that is what Recognise is going to achieve.

The article is based on my interview with BizVision’s Malcom Gallagher which took place in Aug 2020.