With banks retreating, how will accountants cope?

Written by Allica Bank

With banking services for SMEs changing, accountants are increasingly being asked to fill a knowledge gap.

It doesn’t seem long ago that banks were a prominent feature of our high streets. Other shop tenants would come and go, but the banking names we’ve all grown up with remained proudly in position for decades, impervious to the changes around them.

For local business owners, this consistent presence was a boon – they knew where their bank manager was to arrange a meeting to discuss business plans. Their other key advisor on matters of finance was of course their accountant, who probably also knew that same bank manager.

The accountant looked after the books of the business, which the bank needed to see to support the business which financial products could be beneficial. Accountant and bank manager would work together in the best interests of a business, giving the owner a sense of security that they had two financial experts at their disposal.

High streets have changed profoundly in the last couple of decades, largely thanks to technology, which, with online banking so convenient now, has reduced footfall for banks. If a local high street bank has closed its doors or reduced the services it provides as a result, there’s a fair chance that bank manager who helped businesses has also disappeared. If they don’t meet the criteria to have a dedicated contact at their bank, they’re increasingly coming to accountants with questions about finance options.

“It's not the accountant's job to know what all the financial products available are, what the current rates are or what their clients should be looking at, but at the same time accountants do want to help their clients run their business as successfully as they can. So, accountants need to have support in understanding what's happening in the market,” said Sophie Hossack, Allica Bank’s Head of Partnerships.

This is why Allica has launched a dedicated accountants partnerships team. As a bank specifically set up to give established businesses the banking they deserve, we want to plug the gap left by the absence of local bank managers as banks retrench.

“We always knew that if you want to be the most recommended business bank by SMEs, you need to also work very closely with the people that they trust, listen to and ask advice from. And that really is the accountants,” Sophie confirms.

How banks are sidelining SMEs

Traditional banks continue to invest in serving large corporate businesses and have found efficiencies to support simple micro-SMEs. But medium-sized established businesses, the backbone of the UK economy providing 30% of all jobs, are increasingly underserved. They are often being denied longer-term financing or working capital and in some cases are having their accounts closed with little warning.

Allica’s accountancy partnerships team has been up and running since May and Sophie has heard the frustrations that accountants have in trying to communicate with banks. Just like their clients, accountants often no longer have a dedicated contact at a bank to talk to, or they just don’t know who the right person to speak to is. Dealing with banks can also take up a lot of accountants’ time and, in the worst-case scenarios, can jeopardise the relationship they have with their clients.

“If banks request a lot of information for a lending application for example, which takes several weeks and attempts by the accountant to get from their client, it can create friction. And then if the bank suddenly decides to decline an application without reason it’s frustrating for everyone. I was at CIMA’s conference in July, where a number of accountants said this had been their experience,” said Sophie.

Allica’s accountancy partnerships team is there to plug the gaps left by the absence of a dedicated bank contact. First and foremost, our team can take a look at the banking services of your clients to see if they’re serving the business well. For example, a significant number of SMEs have cash reserves sitting in business current accounts earning a paltry rate of interest. In fact, SMEs collectively have £150 billion of deposits sitting in accounts that offer no interest. With easy access accounts currently offering between 3% and 4%, that's at least £4.5 billion of potential interest SMEs are missing out on.

The value of communication

For accountants, having a relationship with a bank can open conversations about how they might add value for their clients. For example, our team can advise accountants on the conditions our credit and underwriting teams look for when assessing applications, which means accountants can then offer the kind of financial insight their clients are increasingly coming to them for.

As we wrote at the top of this article, communication and good relationships are really the key when it comes to serving businesses better. If accountants have contacts at a bank to talk to, then they have the answers their clients are seeking quicker, which of course only adds to their value in the eyes of the client.

Our accountancy partnerships team is really there to re-establish that happy triangle of working relationships that we described at the top of this article. Modern life is very different to the time when accountants, bank managers and business owners all lived in the same community and saw each other regularly.

Technology may have altered the high street, but it’s also made communicating easier. All that’s left is knowing who you need to speak to, which is really what our partnerships team is all about. If we can make it easier for accountants to serve their clients better by offering a dedicated contact and knowledge about financial products, Britain’s SMEs will prosper as a result. And that’s good for everyone.