# For today’s SMEs, relationship banking and digital services must both play a role
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-05-21
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: The Role of Banks in Supporting SMEs: Relationship Banking
Meta Description: Discover the importance of relationship banking and digital services in supporting small and medium-sized enterprises in today's fast-paced business world.
URL: https://financedigest.com/for-todays-smes-relationship-banking-and-digital-services-must-both-play-a-rolehtml

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_**Ian Rand**, CEO of Barclays Business Banking_

Today’s small and medium-sized enterprises (SMEs) are remarkable for their agility and diversity. They have embraced shifts in technology, such as using the internet to transform their marketing or operations. At the same time, they are reflecting changes in society. For example, the [growth of flexible working has led to a surge in the number of sole-trader businesses](https://www.financedigest.com/extracts-and-distillates-market-overview-high-demand-recent-trends-future-growth-business-scenario-technology-2022-2029.html "Extracts and Distillates Market Overview, High Demand, Recent Trends, Future Growth, Business Scenario & Technology 2022-2029").

Amid this moving and vibrant landscape, banks play an important role, not just providing the financial plumbing that allows businesses to [function](https://www.financedigest.com/easing-the-burden-of-data-overwhelm-in-finance-functions.html "Easing the burden of data overwhelm in finance functions"), and the finance to help them grow, but also – and critically in my view – the guidance to help them navigate the sometimes confusing world of business and finance.

But just as SMEs continue to change, so [must banks](https://www.financedigest.com/banks-and-insurers-right-to-prioritise-technical-skills-in-operational-risk-but-must-not-overlook-training-in-nurturing-talent.html "Banks and insurers right to prioritise technical skills in operational risk but must not overlook training in nurturing talent  "). It is vital they keep delivering the benefits of technology that make [operating easier and faster](https://www.financedigest.com/trend-micro-vision-one-stops-threats-faster-streamlines-operations-and-cuts-costs.html "Trend Micro Vision One Stops Threats Faster, Streamlines Operations and Cuts Costs"). They must also support the full range of [business owners](https://www.financedigest.com/carbon-zero-what-it-means-for-business-owners.html "Carbon Zero: What it Means for Business Owners"), including some whom a couple of decades ago might never have considered an entrepreneurial path.

Unsurprisingly, there is near-universal agreement about the need for [banking services](https://www.financedigest.com/the-gmp-cell-banking-service-market.html "The GMP Cell Banking Service Market") to keep evolving. But ask how this will, and should, happen and there is [lively debate](https://www.financedigest.com/macron-le-pen-clash-over-cost-of-living-in-french-election-debate.html "Macron, Le Pen clash over cost of living in French election debate").

**Different approaches both bring benefits**

Broadly there are two types of business [banking today](https://www.financedigest.com/stress-testing-why-did-my-bank-go-bust-today.html "STRESS-TESTING – WHY DID MY BANK GO BUST TODAY? "). On the one hand, there is relationship banking, as practised and promoted by conventional banks. This is the traditional form of banking, with a local [manager acting](https://www.financedigest.com/fintech-and-compliance-managing-the-eternal-balancing-act.html "Fintech and compliance: Managing the eternal balancing act") as a partner for clients and using his or her experience to support them.

On the other hand, there is [digital banking](https://www.financedigest.com/being-the-best-digital-bank-is-not-enough.html "Being the Best Digital Bank is Not Enough"), providing speed and convenience. There are even digital-only fintechs offering lending and banking services – some apparently promising all an SME could need through an app.

As you might expect, given I work for Barclays, my view is that SMEs today need both fast, effective [digital services and also relationship banking](https://www.financedigest.com/how-to-enhance-banking-services-with-digital-performance-intelligence.html "HOW TO ENHANCE BANKING SERVICES WITH DIGITAL PERFORMANCE INTELLIGENCE"). However, I am also adamant about the reasons for this, which are sometimes under-appreciated.

Let’s be absolutely clear: increasing competition in [digital services has driven innovation](https://www.financedigest.com/the-soft-skeletal-implants-market-revolve-around-digitally-driven-innovation.html "The Soft Skeletal Implants Market revolve around digitally driven innovation"). Furthermore, fintechs’ focus on user experience and the slick [delivery of services](https://www.financedigest.com/online-food-delivery-services-market-will-reach-a-valuation-of-over-us-4212-6-mn-towards-2029-end-fmi.html "Online Food Delivery Services Market will Reach a Valuation of over US$ 4,212.6 Mn towards 2029-end: FMI") has increased competition and raised the bar across banking.

But while the [benefits of digital services – their speed and convenience – largely speak for themselves, and attract attention for their innovation, the benefits of relationship banking](https://www.financedigest.com/online-banking-benefits-and-risks-of-managing-your-finances-online.html "Online banking: benefits and risks of managing your finances online") deserve more attention.

**Relationship** [banking has a vital role](https://www.financedigest.com/bank-of-england-names-former-goldman-economist-pill-to-top-economics-role.html "Bank of England names former Goldman economist Pill to top economics role")

For many small businesses, and despite [advances in technology](https://www.financedigest.com/banks-deploy-ai-3-major-technological-advances.html "Banks Deploy AI – 3 Major Technological Advances            "), conversation with their dedicated relationship manager remains invaluable. It can help the business owner not only evaluate options, but also [lead them to think about opportunities](https://www.financedigest.com/blood-thawing-systems-market-analysis-growth-opportunities-future-demand-and-leading-players-updates-by-forecast-2030.html "Blood Thawing Systems Market Analysis, Growth Opportunities, Future Demand and Leading Players Updates by Forecast 2030") they would never otherwise have considered.

Let’s take the example of an electrician who [needs financing](https://www.financedigest.com/global-crises-that-need-the-finance-industry.html "Global Crises That Need The Finance Industry") for a new van. By just going online they could [today quickly access a range of financing](https://www.financedigest.com/from-fragmented-systems-to-unified-cpm-unicredit-prepares-for-todays-finance-challenges.html "FROM FRAGMENTED SYSTEMS TO UNIFIED CPM – UNICREDIT PREPARES FOR TODAY’S FINANCE CHALLENGES") solutions, but a conversation with a relationship manager could be far more valuable. If the new van is required because the [business is expanding, then that might spark a conversation about what else they need to think about as their business grows](https://www.financedigest.com/title-homeopathic-veterinary-medicines-market-growing-at-a-cagr-of-5-business-and-future-opportunity-2031.html "Title: Homeopathic Veterinary Medicines Market Growing at a CAGR of ~5% | Business and Future Opportunity – 2031"). But equally, if the issue is that their current van has broken down, then maybe a short-term overdraft to [fund repairs could be a better and cheaper solution](https://www.financedigest.com/the-professionals-at-real-estate-funding-solutions-helping-you-find-success-with-commercial-real-estate-loans.html "The Professionals At Real Estate Funding Solutions Helping You Find Success With Commercial Real Estate Loans"). What’s more, a conversation with a relationship manager could be the spark that allows a business to see [opportunities and gain confidence to invest](https://www.financedigest.com/unlocking-fresh-business-investment-opportunities-beyond-covid.html "Unlocking fresh business investment opportunities beyond COVID") in their business.

I am also struck, when I travel to different regions, by the range of conversations our relationship managers have with clients. Not just about finance options, but also about topics as diverse as local accountants and the availability of storage [units on the local industrial](https://www.financedigest.com/carlsbergs-poland-unit-could-stop-production-lack-of-co2-threatens-food-industry.html "Carlsberg’s Poland unit could stop production; lack of CO2 threatens food industry") estate. Their experience and local knowledge mean relationship managers often have valuable networks that can [bring wider](https://www.financedigest.com/adverty-wins-third-us-patent-for-brainimpression-bringing-ad-viewability-technology-to-gaming-on-mobile-tv-screens-and-the-wider-metaverse.html "Adverty wins third US patent for BrainImpression™, bringing ad viewability technology to gaming on mobile, TV screens and the wider metaverse") benefits.

Importantly, the outcome of this type of banking is a strong, enduring relationship that benefits both parties in good weather but also, crucially, in bad. Challenging times are among those when a relationship manager, and specialist staff they can call on for support, can [play a particularly vital role](https://www.financedigest.com/the-role-embedded-finance-systems-will-play-as-commerce-goes-increasingly-digital.html "The Role Embedded Finance Systems Will Play as Commerce Goes Increasingly Digital") in helping a business – and when a lack of these people could cause real problems.

In the days after the recent collapse of Carillion, our relationship [managers made over 1,000 calls to SMEs in its supply chain](https://www.financedigest.com/supply-chain-management-bpo-market-is-thriving-with-rising-latest-trends-2014-2020.html "Supply Chain Management BPO Market Is Thriving With Rising Latest Trends 2014 – 2020"), to tell them that Barclays was ready to support them. That’s not something I believe you can do as well via an app.

Such considerations are important, and not just for business owners but also the economy overall. The importance of SMEs to the UK is easy to grasp when you consider that the latest [government figures](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/663235/bpe_2017_statistical_release.pdf) suggest they account for 16.1 million jobs, or 60% of all private sector employment.

At Barclays, our mantra is relationship-based, [digitally driven](https://www.financedigest.com/the-medication-dispenser-market-revolve-around-digitally-driven-innovation.html "The Medication Dispenser Market revolve around digitally driven innovation"). This means not just delivering the best of both, but using them together to support our clients – now and into the future. Relationship [banking still has a vital role to play](https://www.financedigest.com/dont-play-second-fiddle-how-disruptor-banks-can-leverage-music-and-audio.html "Don’t Play Second Fiddle: How Disruptor Banks Can Leverage Music and Audio"), alongside the speed and convenience of digital services, in supporting SMEs and the determined people who lead them.


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