New research has revealed that 29 per cent of finance managers at small and medium-sized enterprises (SMEs) are likely to switch their main bank account in the next five years.

Finastra commissioned YouGov to survey more than 450 UK SMEs, finding that while the majority of respondents (86 per cent) were either fairly happy, or very happy with their bank, almost a third could be open to a new offering from a challenger bank.

In terms of potential movers, the number rises significantly among a younger demographic, with 49 per cent of respondents under 45 years of age saying they would be very or fairly likely to switch banks in the next five years.

Among the most popular reasons given for switching were factors such as: a better overall service; an incentive or recommendation to switch; and a better digital or mobile banking experience.

The research found that 32 per cent of recent switchers now hold their main bank account with a challenger bank, while 40 per cent of finance managers under 45 years-old would consider banking with a digital giant like Google, Amazon or Facebook. In contrast, just 13 per cent of over 55s felt the same way.

Despite these trends however, just 11 per cent of SME finance managers overall were familiar with the term Open Banking. This did rise to 17 per cent for under 45s and to 24 per cent for firms that had recently switched accounts.

While many respondents aren’t familiar with the term Open Banking, many said they would value the opportunities it presents. Some 24 per cent would like to see bank data synced to accounting systems for easier tax returns, while 19 per cent saw the appeal of automating their invoicing and/or payment payables processes.

When it came to the idea of sharing the company’s data so that third parties can offer additional products and services relevant to their business, just 27 per cent of respondents said they would be happy do so. This rose to 44 per cent for under 45s and 43 per cent of companies which have recently switched their main bank account.

Mary Connor, director for product management and retail banking at Finastra, said the survey highlights that differentiation beyond the online banking experience, in terms of the products and services offered, is really important.

“It also shows that while challengers have indeed been winning new SME customers from the high street banks, they have to work hard to keep them.

“For long-term success, banks need to rapidly evolve their portfolio of SME banking services and build their ecosystem on a retail banking platform that delivers great customer service, increased agility and the ability to scale rapidly,” she added.

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