A crisis is the perfect time for a new bank

By Jason Oakley

WHO would want to launch a new bank during a global pandemic? It is a question more than a few people have asked me in recent months when they hear Recognise is on the brink of receiving its banking licence. It is certainly true when we started out to create Recognise three years ago, a bank specifically designed to serve the SME community, we could never have foreseen we would be welcoming our first customers amidst the economic disruption Covid-19 has caused. But I believe the virus has reinforced the need for our offering and made it more pressing than ever.

The effects of the health crisis are already being felt in all parts of the economy. Brokers understand better than anyone the difference a decent supply of credit will make to businesses in the tough years ahead. Business owners will need advisers who understand their needs and can provide them with the support necessary in as timely a manner as possible. Brokers will play their vital role, as will Recognise. From our standpoint, that means providing bankers who are in the community to help their clients. It may sound evangelical, but I believe this is Recognise’s fundamental mission – serving the business customer.

We all know SMEs are the backbone of the UK economy. They account for 99% of the business population, provide three fifths of the employment and around half of turnover in the UK private sector (Source). Yet, they remain overlooked, ignored and dangerously neglected. They need someone to listen to them, champion their cause and give them what they need not just to survive but to flourish. That is where Recognise comes in.

My understanding of business does not just come from my years of working in SME banking. My father was a carpenter who set up his own business. Some of my earliest memories involve him juggling those competing work commitments – managing cashflow, meeting payroll, dealing with VAT returns and wading through red tape. During my 35 years in financial services, I have set up and sold three businesses, so I have had experience of these challenges, too. This is also true of one of our key investors, Ruth Parasol, who co-founded Party Gaming, the online casino software giant. We also have two other anchor investors – the Bard family and a Delancey managed fund. Our team is made up from individuals who can relate to the pressures business owners encounter every day and we have shaped Recognise accordingly.

Until now, I believe too few SMEs have had real support from their banking provider. We chose the name Recognise for a reason. Our commitment is to acknowledge our customers’ needs and put them at the heart of what we do. We are setting out to honour business owners for the value that they bring and to constantly improve in the ways that we serve them. That is what the SME sector, from sole traders through to larger firms, truly needs – proper service, pure and simple.

The economic crash of 2007 was devastating and one side effect was the erosion of expertise in the SME sector within banks. Brokers have done valiant work filling the knowledge gap in the intervening years, working with small business clients to get them the funding they need. But the big banks still have 85% of business current accounts).(Source) and about 85 % of the small and medium-sized business debt market (Source) . But the sad truth is banks no longer know or understand their SME clients. Good, profitable businesses find themselves forced to communicate with their bank through call centres, having no dedicated relationship manager.

When you ask a business owner what they want from their bank, the most important thing is continuity of relationship. Value for money and transparency are essential, of course, as is state-of-the-art technology, but relationship is everything. A business wants a known, trusted point of contact who is accessible. And that relationship should be there for the good times and bad.

Ironically, despitRecognise will do things differently. We want to get under the skin of an enterprise, to understand its motivations, ambitions and how we can help it realise its potential. What could be more simple? Banking is no different to any service business – understand your client; be accessible, creative and responsive; and, yes, give a great service. Getting those elements right is the way to build and, importantly, deserve a good reputation. I sincerely hope – and expect – that is what Recognise will achieve.

The article was appeared in the November issue of NACFB magazine.

Steve Pateman

Steve has had an extensive executive career in banking, leading corporate and commercial banking businesses at RBS/NatWest, managing Santander’s UK banking businesses and as CEO of Shawbrook Bank, Hodge Banking Group and most recently successfully leading the banking licence application for StreamBank.

He is a non-executive Director at Bank of Ireland both in the UK and Dublin and Thin Cats, a specialist SME lending business and is retained as an advisor to Black Lion Ventures. He was previously President of the Chartered Banker Institute.

Steve took up the role of Chair (subject to regulatory approval) at Recognise Bank in November 2024, having served as an Investor Non-Executive Director since January 2024.