New research has shown that UK-based small to medium-sized enterprises (SMEs) encounter regular problems with digital services at the traditional banks they use and are considering switching to mobile-only challengers.

A survey of over 450 SME owners by Unisys Corporation also found that Open Banking has the potential to shake up the market and facilitate innovative new propositions SMEs are looking for.

While awareness of Open Banking is high - 87 per cent had heard of the regulatory change - understanding from SMEs is low, with only 28 per cent having a strong understanding, while one-third had either not heard of it or did not understand it.

The sentiment towards Open Banking was found to be overwhelmingly positive though, with the SMEs in the know being 3.6 times more likely to switch banks in the future to reap the benefits of tailored digital offerings.

The survey revealed that 83 per cent of SMEs use mobile banking, while almost all use online banking for their businesses.

Crucially, 47 per cent of SMEs would move to a challenger bank, digital bank or non-banking brand if they did decide to switch, more so than an established banking brand.

When it comes to what would make them switch, one in six SMEs surveyed said they are already looking to switch in the next 12 months, with the main incentives being if providers can better meet their needs.

In fact, more than half would value an app that gave them access to all their banking facilities in one place, and 37 per cent were comfortable with having little to no human interaction with their business banking interactions.

Trust was cited as the main reason for staying with current providers. Neither service standards nor fees were key differentiators when SMEs considered business banking services, showing a lack of competition in the banking sector, according to Unisys.

Whilst businesses said they find technology critical to their business, 39 per cent of SMEs regularly experience technological problems that stop them access the banking services they require, with eight per cent saying this happens “every time”.

Simon Healy, EMEA industry director for Unisys Financial Services, said that SMEs are tech-savvy with, often a higher uptake of online and mobile services than most consumers, and yet many experience technical difficulties regularly.

“They see the use of technology by banks as critical to retention, but also in the development of new and innovative propositions that can enable their business.”

In terms of Open Banking, he added that the reforms will force banks to shift from being one-stop-shops for financial services, to platforms where customers can start to embrace a more modular approach to banking by giving verified third-parties direct access to this data.

“In today’s digital and customer-driven world, in which those who share data call the shots, it’s adapt or die – and banks need to respond.”

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