Business Banking Just a Little Easier for SMEs

Many of the Competition and Markets Authority’s much hyped banking reforms came into practice at the end of last week, promising to make personal and business banking easier.

What is new?

• Transaction history: Both personal and business customers will now be given up to five years of their transaction history when they close their account. This means they no longer need to be worried that they might not be able to get hold of old information when they need it, a concern that can stop people from looking for a better deal or switching banks.
• Loan price and eligibility tools: Small and medium sized businesses will now find it easier to take out a business loan thanks to a new loan price and eligibility tool launched by four banks: RBS Group, Lloyds Banking Group, HSBC Group and Barclays. This will help SMEs to understand the costs of taking out a loan and find the best deal for them. And they can shortly be accessed by other business, which could help drive innovation amongst comparison sites.
• Business current accounts: The CMA is insisting business current account opening procedures are standardised, so all banks will now ask for the same information from applicants. – making the process of opening an account and switching provider much easier.

There is more to come:

• Open Banking: Open Banking will continue to evolve, with enhancements being introduced through this year and next.
• Information on banks’ services: From August, customers and businesses will be able to access, for the first time, comparable information on the quality of banks’ services.
• Nesta Open Up Challenge: In the Autumn, the second stage of the Nesta Open Up Challenge is due to complete. This is a competition being run by Nesta to provide opportunities for developers of innovative products or services that promote competition in the markets for business current accounts, credit, and financial automation and intelligence tools. The final prizes are expected to be announced in November this year.

Responding to the announcement of these new measures Federation of Small Businesses (FSB) National Chairman Mike Cherry said: "Small firms have much more in common with consumers than big corporations. That’s why we need to move to an environment where small businesses are able to compare and switch banking services with the same ease that consumers enjoy. Today’s CMA reforms take us one step closer to making that a reality.

“Coupled with the Open Banking legislation that’s now in place, the loan eligibility tools for small businesses launched today will make finding the right finance product that much easier. Equally, allowing improved access to transaction histories promises to streamline the process of vetting a firm’s creditworthiness. Only one in ten small businesses currently applies for external finance – that has to change.

“Simplifying the process of changing business current accounts will remove one of the biggest barriers to switching and securing a better deal. Small business owners want to focus on running their firms. They don’t want to spend any more time than is absolutely necessary on paperwork."