London, UK, 4th December 2013 – Global software & IT specialist Comarch today unveiled exclusive new research, “Banking on Tech City”, showing that not only are banks making credit available to Tech City companies, they are offering attractive interest rates and straightforward lending processes. However, while banks are delivering on credit, they are failing to offer the value added services which could help these companies thrive.
In November 2010, David Cameron made a bold speech to Tech City, the digital enterprise hub in East London and cause celebre of UK politicians and economic commentators. He said: “We’ve asked some of the world’s biggest businesses and banks to help provide the finance that’s so urgently needed.” Three years later, banks are delivering on this promise.
Credit promises being met
Comarch gained access to over 50 Tech City companies to ask them about the service they received from their banks. The results showed high levels of satisfaction over credit that confounded headlines and expectations about the willingness of banks to lend, especially to small businesses and start-ups.
Banks failing on specialist banking services
However, when David Cameron made the speech, as well as pledging credit, he also emphasised a need to “provide specialist banking services to high growth technology companies in the area.” Three years on, Comarch’s “Banking on Tech City” research reveals that banks are not yet providing these services.
“It is, of course, good news that banks are giving access to credit. Access to cash is critical to support and sustain the innovation that defines Tech City and a generation of new British companies,” said Eva Jasiecka, UK MD – Financial Services, Comarch. “However, credit is not the only service innovative, high-growth companies need. Both Mr. Cameron and Tech City companies know that specialist banking services can underpin businesses growth, but banks are not yet delivering them.”
The research asked Tech City companies if their banks had offered them vital business support services.
The results demonstrate that despite getting credit right, banks are still some way off delivering full support to these companies. For example:
- Only 27.5% had been offered payment automations
- Just 8% had been offered cash flow forecasting
Tech City needs better service from banks
The importance of business support services to Tech City companies and their relationship with banks should not be underestimated. 57% of respondents believe that tailored banking services could help their business grow. 31% would even be willing to switch bank accounts to get better services.
Head of Level39 and former head of Tech City, Eric Van der Kleij, said: “Difficulties experienced in the financial sector over recent years have allowed alternative forms of business finance like MarketInvoice and iwoca to flourish. Although they have yet to reach the scale of the banks, this is an encouraging sign of dynamism in the FinTech sector. If banks are able to focus a little more on services as well, we could see renewed vigour in the banking sector accelerated by the near double-digit growth of the tech sector.”
“The services that banks are not currently offering are the ones which could make a significant impact on business growth,” said Eva Jasiecka. “A 2011 report by Accenture[1] said that SMEs were “fiercely loyal” to their banks. New regulations for account switching has made it easier for SMEs to move banks. This presents a major challenge to customer loyalty. The banks that start to offer these services will be the ones who win and retain the business of these corporate heavyweights of the future.”
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