Going for growth: a platform for the future

The CBI welcomed the set-up in 2014 of the British Business Bank (BBB) – which has been a great success story for the UK economy and an institution that will continue to provide critical services to the future growth of this economy. The CBI is a strategic partner of its online finance hub and continue to work with the BBB and finance providers on the CBI campaign to make the UK the best place to start and grow a business.

Earlier this year the BBB launched its fifth annual report into small business finance markets which demonstrated clearly that:

• despite strong flows of finance for SMEs, many small businesses remain reluctant to use finance.
• Many high growth potential firms need access to appropriate equity finance
• There is a need to help viable firms across the UK to have access to finance that they need

When you put this into the context of the UK’s future competitiveness, it become mission critical that in a changing global environment, we must all work together to support the UK’s small and medium-sized businesses and ensuring they get the finance they need to achieve their growth ambitions.

If you take a look at the CBI’s latest report on financial services from October 2018 – Funding our Future – our message is clear that financial services are the lifeblood of a healthy economy, supporting all other sectors to develop, innovate and grow.

With the UK number three for start-ups and number 13 for scale-ups globally, the Government is right to put finance at the heart of the scale-up challenge and we really welcome the current workstream on patient capital and the expanded regional role for the British Business Bank.

This are all very welcome measures alongside Open Banking, the Alternative Remedies Package and the two significant initiatives on SME Disputes – the extension of FOS and Business Banking Resolution Services (BBRS).

The UK government’s recent SME finance charter to help businesses through and beyond Brexit is another positive development.

We do need a comprehensive approach to move the dial on growth finance. This involves working with firms to ensure better understanding on the right time of finance for their business at its stage of growth whilst ensuring that policy makers are focussed on real steady improvements on the supply of finance.

The first of our key messages in our Future our future report is that customers/users of financial services must be put at the heart of the regulatory developments and this is essential to our constant call for smarter, fit-for-purpose regulations.

SMEs want to know what finance is out there, real options now and in the future, to know what they are getting and a grown-up relationship with their bank.

To quote the BBB’s report, we need to overcome several hurdles:

• SMEs need to understand better the potential benefits from using finance as well as having increased awareness of the diverse range of products and services available to them
• SMEs need to be encouraged to seek advice – too many rely on one or two conversations with their bank (we hear this all the time at the CBI)
• Address the pessimism that many SMEs feel about their prospects of getting access to finance.
• But key to this whole agenda is trust, building relationships that equip SMEs to weather their growth journey.

Awareness is not just about knowing what options are out there but also how to get finance ready. Financial literacy can make the difference between a business thriving and a business going bust.

A ‘one size fits all’ approach is simply not an option for this critical market, SMEs want providers that take the time to get to know them and their concerns.

Awareness, choice, transparency and relationships are nothing without trust. We need a framework fit for the future and that cope with the technologies transforming financial services beyond recognition.

The issue of SME banking disputes remains a critical issue for business. If we are to continue to rebuild trust between SMEs and the banks that serve them, we need solutions that not only deal with the legacy of the past but also are capable of facing the challenges of tomorrow.

Hence the CBI has been an active member of the Independent Steering Group for the Business Banking Resolution Service (BBRS), with broad support from our SME members and the active involvement of George Mackintosh, Chair of the CBI SME Council. We welcome its work as a step in the right direction. We hope that it will provide a mechanism that can provide swift, fair and reasonable adjudications to deal with complex disputes whilst building on the welcome extension of the remit of the Financial Ombudsman Service.

This response being funded by seven key banking providers is a significant step to building a platform for the future. Whilst there remains much to be done, it is important all concerned work together to see this through.