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Lloyds bank UK business digital index 2015

Second annual benchmark of the digital maturity of SMEs and charities in the UK, by Lloyds Bank in association with Accenture and Go ON UK

Overview

The 2015 Lloyds Bank UK Business Digital Index suggests one year on—the outlook for UK small and medium enterprises (SMEs) is looking brighter. SMEs are making progress in basic digital skills although charities are still lagging.

Key findings of the index:

More progress for regions further from London: The 2015 study shows the regional divide has reduced, with less mature regions of the UK closing the gap with London and the South East.

Stronger link between business success and digital maturity: The key finding is that the most digitally mature organizations are 25 percent more likely to have seen an increase in their revenue in the last two years than the least digitally mature.

Basic digital skill improvements for SMEs: The real progress is found among SMEs—8 percent of the SMEs who had no digital skills last year have now gained some basic knowledge.

Spotlight on charities: A key challenge identified in the 2015 Index is the continued lack of engagement with digital among many charities.

This 2015 UK Index suggests some necessary calls to action to support the development of SMEs and charities, such as:

  • Increasing digital capabilities of charities through improving access and awareness to skills training for the sector.

  • Supporting models for increased regional activity within the UK.

  • Avoiding complacency and developing their newly found skills in digital.

Background

The Lloyds Bank UK Business Digital Index 2015 in association with Accenture and Go ON UK benchmarks the stages of digital development of SMEs and charities in the UK. Now in its second year, the annual index is calculated using primary research survey data from 2,000 Lloyds Bank and Bank of Scotland SME customers, and Lloyds Banking Group customer data. All SMEs and charities are placed on a scale—from low to high—based on their digital maturity.

Overall Index scores in 2015

  • UK digital maturity increased in last 12 months by 2 points from a baseline of 100. While the size of the increase is not great, the sheer volume of this sector within the SME market—78 percent of the total—means the impact is greatly magnified.

  • Growth has been most prominent in regions outside the Southeast of UK—Northwest increased by 9 points, Northeast by 11 points.

  • The Index shows a correlation between higher maturity firms and charities and economic success.

  • Improved basic digital skills across the UK, with 77 percent of firms reporting they have the skills they need in core digital areas

    However…

  • Charities remain the digital laggards by a distance—overall maturity score of 58. Even more charities report lack of digital skills this year than last (58 percent, up from 55 percent).

  • Lack of engagement and understanding of the benefits of digital continues to be the primary reasons for firms and charities not doing more.

Analysis

Key findings of the Lloyds Bank UK Business Digital Index 2015:

Progress for regions most in need: The findings around the regional analysis suggest places with concentrated regional activity boost local digital capabilities, positively impacting the Index. Even Northern Ireland, which remains the lowest area in terms of digital capabilities, has seen an increase of three points.

Stronger link between business success and digital maturity: The findings show a link between digital maturity and organizational success. The key finding is that the most digitally mature organizations are 25 percent more likely to have seen an increase in their turnover in the last two years than the least digitally mature.

Basic digital skill improvements for SMEs: The 2015 report shows encouraging improvements in the level of basic digital skills among SMEs. The number of SMEs lacking these basic skills has decreased from 25 percent in 2014 to 23 percent a year later. However, the results for charities are not as positive.

Spotlight on charities: Charities remain at the lower end of the digital maturity scale, with their Index score declining in 2015 from 59 to 56. Turning to basic digital skills, SMEs have an average of 23 percent without basic digital skills, against an alarming 58 percent for charities.

Recommendations

Based on the Lloyds Bank UK Business Digital Index 2015, some concrete steps toward digital maturity include:

Increasing digital capabilities for charities

Charities are yet to embrace the benefits of digital and are in some cases regressing. This presents a big opportunity to address, educate and motivate charities on digital adoption. There are clear opportunities to help them understand the benefits of digital, in spreading greater awareness and supporting access to skills training.

Encouraging regional activity

One of the most positive findings is the significant increase in the digital maturity of both the North East and North West of the UK. This indicates that the strategy of gathering local and national partners together at a regional level is having a positive impact. We need to understand how organizations can do more to support this model across further regions and local areas.

Moving on from the digital basics

The fact that organizations haven’t developed the way they use websites and digital overall in the last 12 months suggests they are struggling to understand how to really utilize the power of digital beyond the rudimentary. Organizations need to develop from the basics to the next level of digital capabilities.

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