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Challenger banks have been shaking up the world of finance over the past few years, stealing market share from banking heavyweights by offering flexible and competitive products and providing a focus on customer service.

Small and medium-sized enterprises (SMEs) now have more choice than ever before when it comes to business finance services. However, as more challengers enter the market, it can be difficult to determine which bank will work best for your business.

If the UK economy is to prosper, we need to be providing capital to the country’s SMEs, which account for more than 99% of all private sector businesses. As we navigate a challenging economic and political landscape, it is more important than ever that hard-working smaller firms have access to the right financial products.

This means banks need to create more specialist financial solutions for SME. We are one of the emerging specialist banks that are developing tailored products and services to the specific needs of smaller businesses and our chosen sectors.

Challenger banks have certainly lived up to their name – by entering the market and shaking up the status quo for good reason. However, it can be said that many are trying to copy what the major players are offering. By doing this they have created the opportunity and space for specialist challenger banks to identify and meet the complex and unique demands from smaller business customers.

One of the biggest benefits of specialist challenger banks is that we can be more flexible than the bigger banks, which often operate on a tick-box system for lending. At Hampshire Trust Bank we have expert teams who deal personally with every application, using their experience to decide which projects to back. For example, we work directly with smaller housebuilders to fund housing developments up and down the country. This means we can get funding across the line quickly for these house developers so they can take on their larger competitors for the best land deals. We know this approach works for these housebuilders, because we work with them time and time again to get the finance they need to grow their businesses.

Smaller businesses can also benefit from an ongoing personal service with a specialist bank. Research from the University of Bristol found that micro-enterprises in particular want a named contact at their bank who can personally deal with their business banking needs. In fact the report cited that this approach is vital for smaller companies to operate successfully.

SMEs can certainly now start to have the upper hand by having more choice when it comes to the banking. Therefore when considering different finance options, businesses should identify a bank that has both an understanding and the experience of dealing with the dynamics and risks that occur in different industries. Specialist, smaller banks will be only too aware of this environment because they are also themselves in SME bracket and have already walked the difficult road to growth and profit. It is this experience that forges close working partnerships between smaller businesses and banks and ensures they can navigate these issues and nuances.

There is no doubt the traditional banks will continue to flex their muscles and have a place in the business banking world, but with competition increasing, the only certainty is that the banking landscape will continue to shift to the benefit of smaller business owners.

By Mark Sismey-Durrant, CEO at Hampshire Trust Bank