What can banks do to address Britain's productivity crisis?
Jonathan Thompson, founder and CEO at BankNorth UK | 15:20 Wednesday 5th June 2019
Poor productivity is seen as one of the biggest (perhaps the biggest) economic challenges facing Britain.
Productivity — which is measured by the amount of work produced per working hour — is one of the main drivers of long-term economic growth and higher living standards.
However, growth has been sluggish over the past decade as the UK economy focused on recovering from the downturn triggered by the 2008 financial crisis and with the Office for National Statistics (ONS) referring to the UK’s "productivity puzzle".
In the future, small businesses have a vital role to play in boosting Britain’s productivity — SMEs make up the majority of UK businesses. Increasing productivity within the SME sector would make a huge difference to the UK’s economic output, and here at Project BankNorth we recognise that specialist banks have a crucial role to play in supporting Britain’s entrepreneurs.
Project BankNorth is in the process of building a bank designed specifically to support the needs of SME borrowers in the UK, with the aim of improving access to finance for this critical segment of the UK economy.
So, what can specialist banks do to support SME productivity?
First and foremost, in order to drive economic growth, specialist banks must lend to businesses in order to help them grow and evolve. In addition, they must continue to provide competitively priced finance that can help firms to invest in the future.
Here at Project BankNorth, we believe a personalised approach is vital in providing SMEs with the tailored support they need to grow and can significantly help to tackle today’s productivity conundrum.
Invest for success
Second, for businesses to successfully help to solve the productivity problem they must be willing to invest. To do this, SMEs require consistency and clarity of approach by banks so that they can have the confidence to invest and grow their business.
That means being committed to the SME space, providing quick decisions (yes or no) and delivering finance at the pace required by the business. Furthermore, the ethos of the bank and its interaction with customers should be based on traditional principles, including those of trust, transparency and simplicity.
Finally, two of the most common problems causing lower productivity is a lack of sufficient training and up-to-date technology.
SMEs which invest in their workforce and include opportunities for career growth are more likely to attract talented, hardworking and ambitious employees, who seek a career that can offer them the personal growth they crave.
Project BankNorth aims to make the process easier for SMEs to secure funding, which we believe will enable them to implement business growth decisions at pace. By investing and improving their business, an attractive by-product is that this should make the SMEs better, more rewarding and engaging places to work. This will help to continually improve the UK’s workforce and support an improvement in productivity.
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