How business owners really see their business

Fundamentally misunderstanding this is leaving the door wide open to challenger banking in the small business market

“Big businesses are totally, hopelessly clueless about small businesses” says Robert Craven author of Kick Start Your Business.

It’s a startling claim and also one that most CEOs of private business would recognise and agree with

In a recent survey 74% of private business CEOs believed their corporate suppliers neither understood nor cared about their business

How can this situation be allowed to persist? It’s not as if the Big Five banks are secure in the small business market. Whilst they still control 90% of the SME loan book this is starting to change. And change fast. In the past year or so five challenger banks have listed on the London Stock Exchange alone raising over £350m of new capital.

Small potatoes perhaps but their growth in a market the dominant players really should have sewed up is remarkable – and accelerating. According to KPMG the challenger banks have grown their loan books annually 8.2% between 2012 and 2014. This compares to an annual negative 2.9% for the Big Five. Aldermore, for example, has seen a compound annual growth rate in net loans of 61%.

How far are these facts connected? Is the growth of the challenger bank in owner-managed businesses really because they are seen to understand the sector better? The challengers seem to believe so.

The Head of one challenger bank reports their 700% growth wholly down to their ‘relationship approach’ and not product or price.

So why are the Big Five seen to be ‘hopelessly clueless’ about their key customers? Big banks have focused too much on training their teams on technical, ‘product’ skills and too little on understanding the emotional and commercial realities of running a small business. The reason 74% of CEOs think their bank doesn’t understand them is that their relationship manager has never been trained to understand small business; and the reason the CEOS think they don’t care is because they have never been trained in empathetic skills. It’s telling that one Challenger Banks exclusively recruits ‘good listeners who are patient’ rather than ‘good bankers’.

So, what do relationship managers need to understand about their customers to transform this dire situation?

Firstly, they need to reprogramme how they think. The old ‘it’s my baby’ adage is a cliché. But it’s also true; and grounded in solid neuroscience. Banking attracts and rewards people who are comfortable in the logical certainties of data and empirical thought; they operate most comfortably in their ‘thinking’ cerebral cortex. Most entrepreneurs function best in their ‘feeling’ limbic brain relying more on intuition than logic. That’s one reason that most business owners have a far more profound emotional connection with their business than a corporate manager can easily fathom. And yet understanding that limbic, emotional connection with the business is key to forming a trusted relationship. And that understanding can be taught.

Secondly, they need to understand that not all businesses are the same and that the turnover of a business is a very poor indicator of its commercial needs. All businesses are an emotional journey and the feelings and energy of the owners at each stage are a far better indicator of what the business needs than the business size. Understanding lifecycle stage and thereby predicting accurately what the business needs now and in the near future is a skill that can be taught.

Finally, they need to understand that, whilst, the bank may see the business as a bundle of financial KPIs (and most of these sit in the P&L), the entrepreneur at his or best is instinctively focused on a set of intangible assets that drive these financial numbers. CEOs that obsess with P&L outcomes get far less growth and value than those who focus on source ‘assets’. Relationship managers who have the commercial acumen and confidence to engage CEOs at this profoundly strategic level and challenge their assumptions about what their business could achieve will offer transformative value. This commercial acumen can be taught.

600 banking managers who had learnt these three skills, 94% reported winning immediate new business from existing customers

This is not a theoretical idea. In research of 600 banking managers who had learnt these three skills, 94% reported winning immediate new business from existing customers  business that their previous lack of understanding of the customer had not allowed them to even be aware of.

If it is true that the Big Five are seen as ‘totally, hopelessly clueless about small businesses’ and this is even partly responsible for leaving the door open for challenger banks, there is an urgent imperative to address the problem. And it has been demonstrably proven that this can be achieved through some simple business training of relationship teams in just three core skills.

You might be interested in…

The Neuroscience of Trust

19th Jan 2017


Paul J Zak

Know your ‘why’

14th Sep 2016


Michael jr

How to make corporate purpose more than just corporate jargon

23rd Jun 2016


Steve Fuller

The Contexis Round Table Series – Purpose: Revolution or Bandwagon

16th Jun 2016


Contexis Round Table series

What we can learn about purpose from Elon Musk

24th May 2016


Sebastian Bailey

Exponential Organizations

4th May 2016

Salim Ismail, Michael S. Malone and Yuri van Geest

Happiness is the new productivity.

11th Apr 2016


John Rosling

Growing your business on purpose

11th Feb 2016


Steve Fuller



19th Jan 2016


John Rosling

Too good to be true?

18th Jan 2016


John Rosling

How business owners really see their business

1st Dec 2015


john rosling

Why purpose matters to marketers

26th Nov 2015


Paul Twivy

Why purpose-led transformation trumps a drive for performance

26th Oct 2015


EY Voice via Forbes

When success can lead to failure

10th Sep 2015


David Pinder

The Innovation Game


10th Aug 2015


John Rosling

Round Table: The entrepreneurial corporate

26th Jun 2015


Contexis Round Table series

How to build teams that innovate under pressure


3rd Jun 2015


John Rosling

Tony Hsieh: Adopt holacracy or leave

30th Apr 2015


Fast Company

The costly truth about the SME market

30th Apr 2015


John Rosling

If you lead them, will they come?

21st Apr 2015


Jason Forrest

Why Spotify makes mistakes faster than anyone else

30th Mar 2015


Spotify team

Why small businesses don’t trust corporates (even friendly ones)

11th Mar 2015


John Rosling, Contexis

No Borders?

8th Mar 2015


John Rosling, Contexis

The Control drug – going cold turkey as a leader?

1st Mar 2015


John Rosling, Contexis

Why the lean start up changes everything

22nd Feb 2015


Harvard Business Review

Love in the Boardroom?

15th Feb 2015


John Rosling

Will tech disrupt banking? How can it not?

1st Feb 2015


Business Insider

The world is changing – do your sales people need a micro-MBA?

29th Jan 2015


John Rosling, Contexis

Five generations of employees slam together in corporate land

20th Jan 2015


John Rosling, Contexis