The launch of Silicon Valley Bank’s (SVB) physical presence in the UK is certainly something to take note of. A bank in the UK which understands innovation and the importance of technology will surely prove a rival to other financial services organisations. The very nature of SVB – both its characteristics and its service offering – immediately puts it at the top of the list when we think of what the future of specialised financial services could look like.
A recent report from Bank of England confirms SMEs aren’t getting credit, and worse, are having overdraft facilities cut or withdrawn. The stress on the economy continues to take its toll, making it easy to see why lending is an unattractive prospect. Retail banks have received a push from Government to offer more financial services to SMEs; however it’s a strict process, sometimes a challenge even, for established small and medium-sized businesses to obtain finance. The reason why is because the banks are traditionally conservative and process-oriented in terms of risk assessments, which leaves no room for leniency.
Taking a more liberal, less risk-averse approach to providing finance, however, isn’t as straightforward as you might hope for most of the UK’s banks. SVB is unique in not taking a ‘tick-box’ view, instead understanding the investment potential in innovative companies. Whilst UK banks aren’t likely to drop their conservative approach, there are certainly lessons to learn in offering a more personalised service to SMEs, as they would to personal customers. Relationship managers don’t necessarily understand the unique business of an SME; instead they are looking at the accounts, not the business owners or entrepreneurs and their plans for growth.
The trust between SMEs and banks has been damaged, so work needs to be done in order to demonstrate more support for the sector. Thinking beyond traditional service offerings, beyond access to finance is a game-changing move and one which I expect we’ll see more banks seriously consider in the coming months with the emergence of new partnerships.
A bank which understands innovation and the importance of technology is a welcome addition to the UK. With its unique service offering SVB demonstrates what the future of specialised financial services could look like.
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