SME Banking is set to be a major area of competition in 2020-25, with challengers investing over £1bn, and huge customer acquisition commitments.
Incumbents and challengers alike flooding the web with adverts for their new or existing SME Banking offerings. This is a result of the Capability & Innovation Fund’s award of roughly £500m to a number of banking challengers – most notably Metro, Starling, and Tide/ClearBank.
Opinions are still mixed on what impact this will have on the market, with estimates varying from 7% to 17% of SME customers switching from the Big 4 each year. Regardless of the outcome, it is clear that this space is going to become a major battleground between the challengers and incumbents over the next few years.
What is the future for incumbents in SME Banking?
Will the challengers be able to carve out a share of this niche?
Could this lucrative market finally allow the challengers to become profitable?