With the rise of alternative lending options, banks are at the risk of being dethroned as leading business lenders for entrepreneurs. This announcement follows HSBC’s plans to introduce a virtual platform that cuts business loan application and approval times in half
A survey by the Bank of England revealed an increase in the proportion of loans that banks approved for small and medium-sized businesses for the fourth consecutive quarter this year.
It is evident that the demand for loans from SMBs is on the rise, and with the rise of quicker and more efficient lending options from challenger banks and peer-to-peer platforms, banks are at the risk of being dethroned as leading business lenders for entrepreneurs.
“Expectations of banks are rapidly changing, and we understand that we must adapt. The reality is customers demand faster and simpler access to their banking services, when and how they want,” Richard Davies, COO of HSBC Commercial Banking UK, stated.
This announcement follows the bank’s plans to introduce a virtual platform that cuts business loan application and approval times in half.
Despite the shaky position banks may have in the world of SME lending, growing businesses reportedly still favour established banks for processes like payments.
Research from Visa Europe shows that nearly two-thirds of about 750 small business owners said they trusted their business bank or building society to be their payment provider, over alternative providers.
Kevin Jenkins, Managing Director of Visa UK said: “The banking and payments proposition for small business is different and has to be treated so. Resources are scarcer and the time to invest in and consider these kinds of issues is typically less.
“The impact is the same regardless of business size though. If small businesses feel frustrated or unable to utilise the best payment or banking offering for them and their customers, then they can’t enjoy the benefits these bring. Given the top three barriers to change are cited as perceived cost, risk, and other priorities being focused on, that suggests we need to start with making these products as accessible and useful for this audience as possible.”