From XU Magazine, 
Issue 39

XU Magazine sits down with Sophie Hossack, Head of Partnerships at Allica Bank

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Sophie Hossack, Head of Partnerships at Allica Bank

Current Business Bank Landscape and Frequent Concerns from Accountants about Big Banks

XU: What do you see as the biggest challenges currently facing the business banking sector in the UK?

SH: Having navigated through Covid, rising prices, higher borrowing costs and a challenging economic environment, many SMEs are finding it increasingly hard to access finance. With some banks tightening their credit appetite and reducing their exposure to particular sectors, they are also taking longer to give SMEs an answer as to whether they are prepared to provide financing for growth or working capital support.

Previously an SME might have had a dedicated Relationship Manager that understood their business and took an interest in their plans and ambitions, today many find themselves with an increasingly impersonal service, unable to get speak to a human or spending a long time waiting on hold for a call center.

What’s more, despite the base rate currently sitting at 5.25%, SMEs are being let down when it comes to the interest they earn on their hard-earned cash. Whilst banks have gradually increased the rates they pay on fixed term and notice deposit accounts, most have been reluctant to increase much when it comes to interest earned on the current account. With many SMEs not having the luxury of being able to tie their cashflow up for longer periods, they are losing out on potential interest that could make a meaningful difference to their business.

XU: How have the needs of SMEs evolved in recent years, and how are big banks struggling to meet these needs?

SH: Staggeringly in 2023, over 140,000 SMEs had their bank accounts closed. With little warning these SMEs found themselves unable to access their banking due to a change in their business, such a change in shareholding. Being de-banked and having their account frozen or closed is now a significant concern for business owners. As Relationship Managers have been withdrawn, banks can no longer effectively verify and validate a change in a business's circumstances or structure. Instead, it is quicker for a bank to freeze the bank account rather than understand what has changed.

XU: What are some of the most common complaints you hear from accountants regarding the services provided by big banks?

SH: Over the last 10 to 15 years, accountants and their SME clients have been receiving such a low standard of service and support from the big banks. Unfortunately, their expectations have almost hit rock bottom, often having to wait on hold to speak to someone who doesn’t know them or their business about a time-sensitive query. This experience has become normalised and they can’t see this changing.

Accountants enjoy solving problems for their clients, helping them to make sound business decisions and setting them up for success. This becomes really challenging when banks take months to make decisions on lending or setting up current accounts and if they don’t provide feedback on why an application has been unsuccessful. It’s hard for accountants to then help their clients on what their options and choices are.

XU: Can you share any insights on how Allica Bank is addressing these concerns differently from larger, more established banks?

SH: At Allica, we blend the very best of digital banking – quick processes, efficient decision-making and seamless account setup – with personalised relationship management. Each business customer has their own dedicated Relationship Manager. They’ll have their contact details; they’ll speak to them regularly and will be able to build a good and supportive relationship with them.

In 2023, research conducted by our team of Allica Bank relationship managers, found that and a notable 82.3% of accountants responded that the ‘ability to talk to a person’ is a crucial factor when working with banks or lenders. At Allica we’re actively investing in our people and our technology to give accountants and SMEs the experience they deserve.

The Business Banking Service Gap for SMEs

XU: What specific gaps in the business banking services for SMEs have you identified, and how does Allica Bank aim to fill these gaps?

SH: Allica is actively banking and supporting the UK’s established SMEs. These medium-sized businesses, typically with 5 to 250 employees, represent a tenth of the UK’s SME population. But they are disproportionately important to our economy and our society, representing two-thirds of all SME turnover and employment and even more of the SME borrowing that drives productivity and jobs.

However, these businesses – the small warehouses, wholesalers and factories on the local industrial estate or the family-run hotel, pub or restaurant – are at real risk of being left behind, notably by the big banks. Traditional banks have left our towns, closed their high street branches and removed the relationship managers who made lending decisions.

Established SMEs are complex and need greater levels of support, however the big banks have stopped catering for them, instead they’re focusing on micro-SMEs and large enterprises. This structural issue isn’t going away and it’s why Allica was built. We are focused on banking and supporting this underserved and vitally important segment.


XU: Can you discuss any recent innovations or services that Allica Bank has introduced to support SMEs?

SH: In 2023 Allica published ‘The Great British Savings Squeeze’. This report highlighted the stark difference between the traditional banks’ treatment of SMEs and corporate businesses when it comes to savings. With £150 billion of SME cash earning nothing and a further £125 billion earning 2% less than what is being offered to larger businesses, there is a clear need to raise awareness of the options available to these businesses.

Closing the gap on corporate savings rates and opening up the market to greater transparency provides an opportunity to give a well-needed – and well-deserved – £7.5 billion boost to the bottom line of SMEs.

Allica is proud to be championing this and we also have a leading rate of interest (4.33% AER variable) on our instant access Savings Pot in our business current account. We are committed to helping SMEs make their cash work that little bit harder for them.

How Accountants Can Work Better with Banks

XU: What role do accountants play in the relationship between SMEs and banks, and how can this relationship be improved?

SH: Accountants play an integral role in helping their SME clients. They are the trusted advisors who support businesses to succeed. This is particularly true for established businesses, who rely on their accountant to have a deep understanding of their business, how they operate and their aspirations.

Historically, accountants and bank managers would work side by side, providing business owners with valuable, timely support and peace of mind. However, with the high street banks reducing their support and removing access to relationship managers, accountants have had to fill the void and provide businesses with even more proactive support.

It’s important for accountants to know what banks are available and where to turn. A collaborative banking relationship can still exist, and it is key to have regular communication with the banks and to build your own banking network. This will ensure accountants are up to date with the right information that can help their clients.

Allica’s partnerships and relationships managers at Accountex London 2024

Allica’s Partnership Team Launch and the Role of Supporting Accountants in the UK

XU: Can you explain the purpose behind the launch of Allica’s partnership team?

SH: At Allica, we’re working on becoming the UK’s most recommended business bank. By delivering a relationship-focused service to the underserved established businesses, we have already become one of the UK’s most highly-rated banks and named the fastest-growing UK fintech in history, according to Deloitte’s UK Technology Fast 50. By continuing to grow and support businesses at this scale, we believe the traditional banks will be encouraged to reassess and improve how they treat this community, whose success is critical to our economy and society. To achieve this, we can’t do it alone, we need to work hand in glove with accountants, helping them to support their clients.

We’ve recently partnered with Nordens Chartered Accountants, and they told us that high street banks haven’t really understood their clients, their needs or their potential. Plus, it was very rare that they have taken the time to understand them as a business either.

Our focus is on earning their trust, helping deepen their client relationships and positively contributing to the accounting industry.

XU: How does the partnership team plan to support accountants across the UK? And what specific benefits can accountants expect from working with Allica’s partnership team?

SH: Our Partnerships Team are focused on providing accountants with the help they and their established business clients need. Practically, this means each accountancy firm will have their own dedicated Partnership Manager. A single point of contact for them to speak to at the bank. Someone who will know their firm and what’s important to them. The experienced team have deep industry knowledge and work with accountants all over the UK at different stages of growth. Accountants can confidently introduce their clients to their Partnerships Manager, knowing they will help to find solutions and support them through the current account application process.

Our team tends to have business current accounts set up in days (rather than weeks, or months!). They also act as a key conduit to other areas of the bank, for example the lending teams who provide commercial mortgages, asset finance and growth finance. Alongside our proactive relationship management, we provide firms with marketing collateral and support to help them confidently identify value-add opportunities and discuss business banking as part of their conversations with clients. We are also launching our online ‘Accountants Directory’ this summer to help established businesses find their local accountants and we’ll be hosting networking events for partners later in the year.

Allica’s Business Rewards Account

Allica’s Recent Launch of Accounting Software Integrations

XU: Can you provide details on the recent launch of Allica’s accounting software integrations?

SH: We know that good and reliable bank feeds are critical for SMEs and their advisors. Earlier this year we launched our direct integrations with Sage and Xero. This means that Allica Bank business current account customers can have their account transactions fed automatically to their accounting software. By sharing this data (including amount, date, time, direction, reference and merchant information) it can save business owners and their bookkeepers and accountants significant amounts of time, reducing manual work and the potential for error. Using these insights, business owners and their accountants can make the most of their finances, finding opportunities to grow and succeed. Our aim is to integrate with the leading software packages, including QuickBooks, to help our customers run their businesses.

Alongside our accounting integrations we also integrate with Wise to help businesses with ambitions to expand and operate internationally. This allows them to use their current accounts to send international payments with transparent fees and no exchange rate markups. The Wise Platform integration means that our customers can complete the whole process of making an international payment quickly and conveniently within their own banking app. They will know upfront the total fees for making an international payment and be able to guarantee the exact amount is received by their recipient.

XU: What’s next for Allica Bank? Are there any more integrations or features that you are looking to implement in the near future?

SH: We’re at a great point where we’re actively listening to our accounting partners, learning what they and their clients need most from Allica. We've had specific suggestions about creating an ‘accountants view’ and also dedicated client money accounts. We’re very open to hearing feedback from firms on how we can make the accounting-banking relationship even better.

Why leave it there?

To find out more about Allica Bank

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