The Breakdown of the SME-Banks Relationship

The digital age has seen the financial landscape change shape. Initially the dominant provider of business finance, high street lenders have seen their position diminished by the emerging popularity of Alternative Finance and tech-based platforms.

Banking scandals in recent years, from the RBS’ Global Restructuring Group (GRG) to Lloyds’ HBOS, have accelerated the country’s financial distress as well as its distrust in institutions. The size and prominence of these banking organisations have allowed for too much power but encouraged smaller, bolder and more flexible platforms to arise.

Alternative Finance providers such as crowdfunding and peer-to-peer lending, have utilised modern technology and dismissed the rigidity of traditional finance in favour of community-based practices. Equity-based crowdfunding even rewards funders with a share of the business, allowing them the opportunity to be more than an injection of cash.

This is not to say that banks do not still play a large part in everyday lives, but merely that businesses and consumers have been forced to re-evaluate their options.