In this piece, we catch up with Ian Walters, managing director of business and private banking at Metro Bank, to discuss the challenges and opportunities facing SMEs, the importance of good support for business banking customers, and the innovations shaping small business success today.
How has the bank’s lending been to SMEs?
We put out a pledge to say we’d achieve £1 billion to SMEs last year in net lending and we achieved that; we’re on track for the same goal this year.
We have sector specialist teams in real estate, healthcare, hospitality, and leisure for example, but we’re not prioritising some sectors over others; we’re seeing a pretty balanced growth.
Within any sectors there are good businesses and not so strong; there are no sectors we’re not open for business in and no customers we won’t try and support.
What opportunities and challenges do you see in the small business landscape?
Brexit is clearly a major consideration for businesses of all sizes but it’s obviously critical for those businesses with a strong import/export profile. Potential changes to trade tariffs coupled with some marked changes in currency exchange rates point to a challenging backdrop against which to invest and grow. That said, we think the current situation holds opportunities for those businesses willing to think internationally. A weaker pound is making British goods more affordable for international buyers. For example, growth in the amount of physical goods being exported by the UK manufacturing sector rose sharply after the referendum result.
“The current situation holds opportunities for those businesses willing to think internationally”
So, the question is: how can British businesses take advantage of the opportunities international markets offer? Here there is good news: we are seeing a wealth of new technologies, platforms and services designed to make it easier for businesses to distribute their products more widely and at a lower cost.
Access to lending for small businesses remains a challenge as the recent British Business Bank report made clear. Here again, new market participants such as peer-to-peer lenders and challenger banks are finally breaking the stranglehold of the Big 5 banks helping to ensure that financing options are available to high-growth firms.
What sectors trends and technological innovations are of interest to you?
We are seeing a move towards smaller, more nimble businesses, often with a single founder with a passion to make a difference. Thanks to the web and the rise of platforms like eBay and Amazon, it is now perfectly possible to scale small businesses rapidly – just look at the success of companies like Not On The High Street. We see this as a trend – small firms with clear differentiation scaling rapidly by taking advantage of the latest technologies and platforms.
In terms of sectors, fintech is booming, and London is rapidly becoming the de facto global capital for fintech innovation.
Open APIs are enabling businesses of all types to more seamlessly integrate with each other and are at the forefront of building a connected economy. Open APIs are just like a USB point, allowing others to dock into your business and consume relevant data, if the customer gives permission. In banking this means it is now possible to see all your bank accounts with different brands through one single app. In the future this is likely to mean it is possible to see your pension and other products listed alongside your account details. So the application of Open APIs is one to watch.
How important is investing in support for business banking customers?
Very important. We continue to invest in the team that support business customers. There’ll be 900 new positions across the bank this year, 100 of which will be supporting business customers, so we’re looking to keep growing and keep the momentum going. We’re seeing really strong growth in asset finance and invoice finance as well.
We’re opening stores too; when a branch closes of another bank, there’s typically a 63 per cent reduction in borrowing. That’s no surprise, because SME customers want to know who their local bank manager is.
If you walk up and down the high street, you’ll do well to find someone that’s a local business manager. In my time here we’ve increased the number of local business managers, outside of store openings by about 35 per cent. Customers say that’s what they want. I think with many banks business customers are increasingly forced down telephony and digital channels only, unless you’re a really big business, in which case you may have a relationship manager but you might not know their name.