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51% of SMEs considering switching to challenger banks or FinTech in 2023, says survey

According to a recent survey by Smart Money People, a UK-based financial services review site, 51% of small to medium-sized enterprises (SMEs) are considering switching their main bank or banking facilities provider in 2023.

The research, which was conducted amongst 500 senior decision-makers at SMEs from December 8th to 14th, 2021, shows that of this 51%, over half (54%) are considering moving to a challenger bank or fintech, and 46% to a high street bank.

Currently, around 80% of SMEs bank with a high street provider. If this switching takes place, it would represent a significant shift in the SME banking landscape.

Medium-sized businesses with between 50-250 members of staff are most likely to switch to a challenger bank or fintech, with nearly four times as many medium-sized businesses considering using a challenger bank or fintech compared to sole traders.

A shift in banking

Young people (aged up to 35) who are in a senior financial role are also more likely to consider switching to a challenger bank or fintech, presumably because this group is also more familiar with using their services for their own personal banking.

“Many of the so-called challenger banks are now household names as their user experience and agile approach has proven attractive and lured many people away from the more traditional high street providers,” said Jacqueline Dewey, CEO of Smart Money People. “Our research shows that 2023 may be the year when small businesses follow this trend and make the move to what is often a quicker, and more convenient banking solution.”

When asked about the factors that would make senior decision-makers more inclined to consider switching to a challenger bank or fintech, the main reasons cited were lower fees (45%) and higher interest rates (33%). Other popular reasons given were better online banking services (33%), an incentive such as cashback or free banking for a period of time (31%), and better customer service (29%).

Reviews are crucial

Smart Money People suggests that whether an SME is currently looking to switch to another high street bank, a challenger bank, a fintech, or a neo-bank, it’s always helpful to read reviews to see what customers are saying about the provider they are considering. 

With no login or account setup required, decision-makers at SMEs can read over 11,000 customer reviews of business banking providers on the Smart Money People website, including whether customers understood the products and services, whether they felt they received good value for money, and whether a provider’s customer service is up to scratch.

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