Why SME banking may spawn the industry’s next big winners
Most new challengers are attacking retail, but a few ingenious startups are moving into the more fragmented and poorly served small business market. It is here that concepts of open banking and banking as a platform may first become real.
In February, the UK’s financial services regulator, the Financial Conduct Authority, finally delivered to the Treasury committee of the House of Commons the full report written by Promontory Financial Group.
The report dealt with RBS’s mistreatment of the many small and medium-size enterprises that had had the misfortune to fall into the hands of its Global Restructuring Group (GRG) in the recession that followed the 2008 financial crisis.
Nicky Morgan, chair of the UK parliament’s Treasury committee, had announced at the start of the month a new inquiry looking at the lessons to be learned from RBS’s GRG and more broadly at the state of the market for SME finance.
According to Morgan: “The case of GRG has undermined the trust of small firms in banks and highlighted the imbalanced and potentially exploitative relationship between banks and SMEs.”
The Treasury committee’s inquiry will consider the extent of competition in the market, as well as access to other sources of funding aside from bank credit available to small businesses, including crowdfunding and peer-to-peer lending.
Around the country a million entrepreneurs roll their eyes: ‘Another report? Yes, that’s bound to make all the difference.’