Rewriting the rules becomes a philosophy

Rewriting the rules becomes a philosophy

Mike Hughes goes to the library to look at the future of Santander’s Breakthrough programme, with Head of UK Banking Steve Pateman.

Steve Pateman has a very bad cold and a very good job. Not an ideal combination, but for Steve the good always outweighs the bad.

As the Head of UK Banking for Santander he basically built the corporate and commercial banking arm which set out to transform how banks approach SMEs and is rightly proud of the progress it has made in rewriting the rule book on how banks are supposed to deal with businesses.

I have heard so many times from small businesses that they have to hunt down sources of financing because banks don’t understand them. They will help, of course, but only if the business plan is rock-solid and good to go. I think Steve Pateman turned that on its head, recognised the absolutely key role SMEs have in the UK’s landscape and opened doors – and minds – to ideas, working in partnership with business owners.

That landscape is now different – as if someone tapped banks on the shoulder and said ‘you know what you need to do? Understand them. Relate to them.’

“There are still challenges out there for SMEs, of course. But these are firms that have been the main drivers behind the recovery, which has taken five years to really get going” says Steve.

“Banks up and down the UK need to continue supporting these businesses and keep that recovery going. We can reflect on what has been achieved, but we also need to focus on what needs to be done to keep businesses growing.”

A close, long-term relationship is central to the Breakthrough philosophy that Steve has developed. The closeness comes from understanding the sector, the route the business has taken so far and where it needs to be heading.

“It’s a little like a library, he suggests. “You can visit as often as you like, take out a book – like a Saatchi & Saatchi masterclass – and perhaps get something from that and then come back later and take another book out from Microsoft and then another book which is a trade mission.

“We run the library, but by doing that we get to know what customers need and can grow with them” Steve is now evolving Breakthrough to focus on five key areas that will address those needs.

We have all seen the graphs of recovery, a steep hill climb rather than a mountain peak, but heading steadily upwards. For small and medium-sized firms to keep pace and then move on to lead the climb, they will need to stick to some basic principles:

  • Make connections
  • Get access to talent
  • Develop an international footprint
  • Have long-term access to finance
  • Gain the right knowledge

“We want firms to be able to develop by focusing on what is particularly pertinent to them at any given stage. So if they are trying to bring in new talent we can help them with internships, and if they want to export we can introduce them to Trade Club, which has a community of importers and exporters in 13 countries to help them get an insight into what a market is like on the other side of the world without having to go there.

“Equally, if they are looking for innovative finance we can show them funding options that will accelerate their growth. And if they need to expand their knowledge in a sector or connect we can send them to masterclasses or events like the Breakthrough Boxes.”

After achieving its early aims, the plan now is for Breakthrough to have a much bigger footprint and a more far-reaching target. “When we started this transformation, we only had market share of about 1-2% and 13 or 14 business centres. Now we have a share of around 7% and 72 business centres, so we can afford to be more ambitious,” says Steve.

The requirements of smaller firms has changed through those five years as well, with intangible things like connections to the right people, or the progress of a good intern to an influential place in the company becoming as important as the core finance options.

Steve says: “I’m incredibly proud of the way Breakthrough has survived and been able to adapt and develop. People forget that we started it when we decided not to be a part of the Business Growth Fund. We took that decision because we thought that, with an entry ticket of £250m, we would want more of a say in where the money was going.

“So we took a brave decision to create Breakthrough, with mezzanine financing at its heart, and have been doing that in the same way for five years. Many banks might have lost track of things after five years, but we have made Breakthrough integral to our DNA.

“I understand the challenges SMEs face. Santander Corporate and Commercial was effectively a start-up, which helps us appreciate what it takes to be successful. We had the support of the Santander Group and that continued and has grown because we were successful.”

“I suppose I’m quite old-fashioned in that I think banks can actually do good. We can take capital  from people who want to invest it and see it grow and give it to firms that need it to expand.

“If you do that well you can be a force for good in the economy, helping create jobs and opportunities.

“I’ve been a corporate banker all my life and helping companies grow and develop is the most rewarding job that I have been lucky enough to have. Santander gave me the opportunity and when I get to the end of my career I will be able to look back and say ‘you know what, I set up an SME bank from scratch with an old-fashioned philosophy at its heart.”

That’s the mix that Santander has brought to the sector –  the resources that a big bank needs, but with long arms to match and a genuinely caring approach. And when you have that as your day job, who cares about a few sniffles...?