
One Savings Bank revealed that its loans and advances rose 13 per cent in the first half of 2014 to £3.4bn due it said to increased lending to SMEs. Total new lending was up 78 per cent to £649m comprising residential mortgages and SMEs.
Aldermore told a similar tale with its lending to SMEs up by £270m or 12 per cent to £2.5bn in its first half. “We’re excited by the significant ongoing growth opportunity presented by SMEs and homeowners, who we believe continue to be underserved by the wider market,” it said. “Our track record and the great customer feedback we receive demonstrate that we’re exceptionally well placed to continue to support these customers and grow the business.” Triodos Bank which lends to sustainable/renewable energy projects also saw its lending grow by nine per cent over the period in the UK. The figures show that challenger banks are continuing to throw down the gauntlet to their large high street rivals. According to a recent KPMG report The Game Changers, UK challengers are outperforming the ‘Big Five’ banks – Barclays, HSBC, Lloyds, RBS and Santander – in small business lending, invoice financing, unsecured lending and second chance mortgages.Read more on challengers:
- Crowdcube’s CEO Darren Westlake on the trials and tribulations of launching a challenger brand
- From Metro Bank to Mondo: A look at the prospects of Britain’s challenger banks
- OakNorth Bank gains licence and aims its proposition firmly at SME lending
Part of the small size of their lending books is down to their newness in the marketplace, still some scepticism amongst SMEs nervous about leaving the familiarity of the big banks and a general lack of awareness.
One SME financial director told me recently that during a recent funding round the thought of talking to a challenger bank never cropped into his head. It was only when that challenger bank made an approach to him did he decide to ‘give them a try’. He was so impressed by their commitment, energy and willingness to understand every aspect of his business and where his needs were not being met that he give them his business. Two challenger banks I spoke to admitted that they had to “get their name out there more”. Another said that 70 per cent of SMEs when seeking bank finance approach just one provider with 90 per cent sticking with their current lending provider. SMEs have to wake themselves up from such inertia. They can’t be like a household which pays no attention to the changes in their gas and electricity bills and shrugs their shoulders at suggestions that there could be cheaper or better alternatives elsewhere.Fear of the unknown can cost you valuable money. A well known energy supplier, outside of the Big Six, told me recently that one way he thinks his company, itself a challenger in the energy sector, could really take on the main players would be to ask the Government to legislate for every provider to list their rivals prices in monthly letters or emails to their customers.
The challenge for SME custom is only beginning to boil.
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