Small and medium-sized enterprises (SMEs) have largely relied on traditional banks to supply the majority of the financial services requirements. From credit to corporate payments, the bank has been at the heart of things and very much in control.
But a white paper by IOE&IT member Currency UK says that this is changing rapidly as the existing bank-business nexus is being altered for good.
The report states that since the Global Financial Crisis revealed the tremendous problems facing traditional financial institutions, the pace of change in the industry has accelerated.
Companies can turn to a host of non-banks to perform most of the functions that banks have until now monopolised.
In particular, businesses are increasingly able to source credit from non-banks, with a vast array of alternative finance channels opening up to them.
The relationship between business and bank has been turned on its head regarding lending. Moreover, SMEs are beginning to realise they can not only go elsewhere for credit, but also for other services traditionally performed by their bank, such as payments, remittances and, most important for any business engaged in cross-border trade, foreign exchange (FX). Volatility has returned to FX markets and many companies are struggling with 'currency headwinds', making forex risk mitigation more of a key corporate priority.
SMEs using FX specialists can lower their costs and benefit from FX tools normally reserved for larger customers, significantly improving cash flow for the businesses trading internationally and resulting in better credit conditions from their bank.
SMEs are now in control of the lending relationship.
Read the full copy of the white paper here.