Jon Hopper is the commercial director of business banking at Lloyds. In this piece, we catch up with him about Brexit, the technological changes that are empowering small companies, and how international trade offers true opportunities for SMEs to expand.
What is your role and how long have you been with Lloyds?
I’m the commercial director for business banking and I’ve been with Lloyds around nine years. I’ve been in this particular sector for more than three years and I absolutely love it, because small businesses are really the unsung heroes of the British economy.
How do Lloyds’ services address the needs of today’s SMEs?
Our business banking division is solely dedicated to the businesses with a turnover of less than £3 million. We have around a million customers and last year some 124,000 start-up businesses started banking with us. We’re a strong supporter of new businesses.
“I have no doubt this resilient small business sector is going to adapt and prosper”
The proposition is multi-channel; digital, mobile, and telephony, and we also have face-to-face local business managers. That proposition has been evolving as customer needs and the expectations of our customers have been evolving as well. We’ve invested heavily in technology and continue to develop both digital and mobile. But we’ve also recognised the need to tailor the approach for larger and faster-growing businesses and so we’ve recently introduced small relationship teams that support groups of customers that are specific to sector. So the businesses get support from someone who truly understands their sector as well.
How is business confidence just now among smaller businesses?
Overall business confidence is undoubtedly weighed down with uncertainty around Brexit and global trade tensions contributing to that sentiment in recent months. Our current data suggests it’s a mixed picture though, as confidence has risen in manufacturing and construction, but fallen in services, especially in retail and wholesale. Confidence increasing in manufacturing is interesting – it’s definitely benefited from competitiveness gains with sterling’s depreciation.
We’re also very aware that business confidence varies hugely by region. So while confidence has fallen in London recently, it remains the most optimistic area of the UK overall. Regions such as the South West and Wales have seen a dip in recent months, but in Scotland and the North of England confidence has actually increased. We will always see fluctuations across regions and sectors in the short-term, but my key message would be that the long-term trend for confidence at national level indicates a good degree of resilience.
How does Brexit rank in the hierarchy of SMEs’ concerns?
If you ask customers what concerns them, Brexit is right up there as one of the main ones for small businesses. For most of them it’s the uncertainty created by it that impacts on them and impacts on their confidence and the certainty of the forward planning. I have no doubt this resilient small business sector is going to adapt and prosper whichever way it goes. But we could see and if I think back to our Business in Britain report, those who felt confident about business interests being protected or promoted in Brexit negotiations fell to 48 per cent from 60 per cent previously. So that’s still higher than those who are not confident but you can see that continued uncertainty is front of mind for a lot of the customers.
What sort of technological innovations are underpinning business success today?
Certainly there are great opportunities emerging, in particular in STEM, as a result of technological change. There are some fantastic new businesses coming into the space around artificial intelligence, machine learning, big data, robotics, 3D printing, all of these technologies that are moving from the conceptual university world into practical application robustness and scalability. So in those areas we see some exciting and interesting companies coming through.
Maximising these opportunities for the country is a bit of a challenge, I think, just for society as a whole. It’s about ensuring that we’ve got the next generation of workers and business owners that have got the necessary skills to exploit the potential of these innovations. So we certainly see a need for collaboration across government, education, and the private sector to try and make sure that we can support companies to make the best of it.
So I think probably a decent example in that space would be the stuff that we’ve done with the creation of the Lloyds Bank advanced manufacturing training centre in Coventry. It’s a state-of-the-art training centre that will help create that new generation of engineers and try and narrow that manufacturing skills gap. So obviously we’re heavily investing in supporting 1,000 trainees to help the UK effectively realise its potential in engineering.
Does the UK have the requisite potential to upskill people to suit the technological needs of the future?
Our digital index points to a huge opportunity for companies to increase productivity, to save costs or access new revenue streams. And what we see there is your more digitally-savvy businesses are much more likely to see turnover growth, much more likely to save costs, they’re 11 times more likely to trade overseas. But there’s 1.6 million small businesses that lack basic digital skills and it’s worse in the charity sector where you’ve got about 100,000 small charities, almost half the charity sector, who lack basic digital skills.
“I think in a more digitally-savvy world, the [international trade] opportunity is open to many more customers”
So we’re getting passionate about digital education and last year we helped 700,000 individuals, businesses and charities with their digital skills as part of our digital know-how events that we’ve run in collaboration with Google throughout the country. I think this is something that all of the industry and all of the country needs to get behind.
Is technology advancing too fast for the UK’s infrastructure to keep up?
We’re trying to solve big problems here. But I think the speed of technological advancement is what sets up the challenge here, and then having an educational system that lines up to make the most of it. I do think it’s as much the speed of technological change for the country as a whole, and then I think it probably needs to – we need to map out how does the education, how does the further education sector, and how does the government and private endeavours seek to make the best of it.
What are the biggest challenges and opportunities out there for business owners?
I think there’s one that’s important and it tends to be related to Brexit but I think would have been important anyway, which is looking for opportunities in international trade. I think in a more digitally-savvy world, that opportunity is open to many more customers than it ever was before and the barriers to entry there are reducing. So that’s where things like the international trade portal I think can be a fantastic tool to support that.
Tariffs and trade wars are a more recent concern in some of the customers I have talked to and I don’t think there are going to be any winners in a trade war, but certainly the implications of that will take a bit of time to play through but hopefully those things, those geopolitical issues resolve themselves before it impacts too badly on businesses.