The majority of UK SMEs prefer dealing with challenger fintech companies over traditional banks.
When it comes to the foreign exchange needs of UK SMEs, many have found that they receive better service from specialist providers in the fintech sector than they do from the traditional banks.
Of the 87% that have found better service in the fintech sector, 89% would be happy to recommend the service to another business. This is compared to only 35% of customers who are considering recommending their bank to other businesses.
The important factors behind this were found to be a better understanding of the business’s needs (85%), delivering a more tailored proposition (94%), and providing a greater transparency on fees (88%).
Although there is a lot of positivity regarding the service that customers are receiving from fintech FX companies, there are still problems that exist.
One of those problems is a lack of awareness, with almost a third (31%) of SME’s completely unaware of any FX providers outside of their traditional banks. This lack of awareness has resulted in customers sticking with their traditional banks rather than moving to an alternative provider.
The survey of over 1,000 senior decision makers at UK SME’s revealed that 30% had encountered issues with their traditional bank being unable to meet their FX requirements, however, the majority (88%) of those affected didn’t switch provider.
Getting the best FX deal has become increasingly important over the past few months with sterling dropping amid the on-going debates over a British exit from the European Union. Since December sterling has dropped 10% against the euro.
Despite the ongoing volatility in the market 70% of those surveyed said that their business could be better prepared to protect themselves against exchange rate fluctuations.
Jonathan Quin, CEO and co-founder, World First, a UK-based FX company said: "Whilst SMEs have historically had to rely on the big banks for any sort of financial service, genuine innovation and technological development from the FinTech sector has given rise to a wide range of truly compelling alternatives."
The flexibility of the fintech start-ups has enabled them to focus their technological efforts on one specific area and to the customer needs. This has given them to ability better service customers compared to banks which offer a much broader portfolio but may find it difficult to be a specialist in every area.
Despite the feeling from SMEs that they are getting a better service from fintech FX specialists, the traditional banks are still likely to be the first port of call for many businesses.
The pressure is on for banks to provide improved services to fight off the growing challenge of the more nimble fintech challengers. Despite this pressure there is also opportunity for banks to improve their services and capitalise on the on-going currency volatility.
Currently the UK fintech market for online payments and FX is £1.9bn, according to a report by EY and commissioned by UK Trade and Investment. The average UK SME trading overseas made international transfers to the value of £256,700 in 2015, according to World First data.
Banks have already been making moves to improve their customer services with banks such as RBS moving to automated financial advice services. The idea is to both cut costs and to improve the service that is being given to customers.
The UK SME survey was undertaken by Censuswide and were published in a World First report title, Don’t Bank On it: The FinTech FX.
