SMEs are the engine room of our economy, generating around 60% of all private sector employment and accounting for over half of all private business turnover.16 And yet SMEs face a £ funding gap.17 Almost half of all SMEs don’t plan to use external finance, citing the hassle or time associated with applying. Of those that have approached their bank, two fifths have been rejected.18 Part of the problem is that the assets that SMEs are seeking to borrow against are increasingly intangible – the value of a brand or user base – rather than physical assets, like building or machinery. SMEs that have not borrowed lack the historic data required for credit scoring. And legal requirements to prevent money 15  See: https://libra.org/en-US/. Federation of Small Business: https://www.fsb.org.uk/media-centre/small-business-statistics. NAO report ‘improving access to finance for SMEs (Nov 2013). 18 Report by British Business Bank: Small Business Finance Markets (2019). 16 17  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  laundering and “Know Your Customer” make the process especially burdensome for a small business with limited resources. This should not be the case in a data-rich world. Lenders should be able to access a broader set of information on which to base credit decisions. Already, search and social media data are supplementing traditional metrics to unlock finance for smaller enterprises whose assets are increasingly intangible.
It contains informative materials which straightforwardly offer basic guidelines as to how to reach the end of the month, how to invest and how to manage one’s finances at different stages in life, or which explain the characteristics of specific, basic bank products and services. I trust that, through the actions promoted by the Financial Education Plan, of which the foregoing are just two examples, the public and private authorities and the financial supervisors are contributing to enhancing Spanish citizens’ financial culture, both for their own benefit and for the sustainability of the financial system. Conclusions I shall conclude as I began. The customer is at the core. This is an idea that is repeated in various fora in which technological innovation in the provision of financial services and the new challenges facing banking are addressed. Transparency, market conduct and financial education are priority areas of attention that are gaining in prominence both on the European agenda and at the heart of the respective national authorities. And more importantly and, probably, what is more effective in the medium and long term, they are taking root in the very organisation of banks. Developing a responsible banking model, with suitably designed products, distributed in the appropriate channel, to the ideal customer, and having regard to individual needs, should today be a priority objective for all: European authorities, national authorities and the banking industry. Thank you for your attention. 8/8