UK businesses are missing out on £85 billion each year due to a lack of digital capability, according to the latest Lloyds Bank Business and Charity Index.
The report highlights that this issue is particularly acute for sole traders, of which 41% have low digital capability. Despite this, UK business looks set to enter a new digital age.
The new report shows that 99% of SMEs and charities have now moved online, up from 92% and 76% respectively since the report was first commissioned in 2014. Businesses and charities are increasingly recognising how important digital is to success. The number of SMEs seeing digital as relevant has increased by 31% to 71% and for charities it has risen from 24% to 67% over the same period.
The largest study of its kind into digital capabilities of the UK’s SMEs and charities, the Index shows that being digitally savvy can pay huge dividends. Businesses embracing advanced technologies including cloud IT, online accounting software and digital training tools could generate more than £100,000 in additional annual turnover than those without.
The benefits can go beyond finances too, with 2.5m businesses also saving time through digital, more than twice as many compared to 2014. SMEs and charities with advanced digital capabilities are able to save a day a week, showing that the benefits of digital go beyond the bottom line.
It is therefore unsurprising that with nearly all businesses nearly online, digital capability is at the highest recorded. Over the last five years, the digital capability score for SMEs has increased by 11 points to 56, and for charities the score has almost doubled, from 24 to 46.
Nick Williams, Managing Director, Commercial and Business Banking Transformation, Lloyds Banking Group,said: “Businesses and charities are seeing that moving online is not only helping increase revenue, but it is also improving productivity levels. The potential £85bn in revenue that SMEs could generate demonstrates the tangible impact of advancing digital capability and skills. The improving digital capability of businesses has led to an increased awareness of potential cyber threats and we can see organisations turning their attention to protecting themselves online.
“As part of our Helping Britain Prosper Plan, we are working closely with the government’s digital skills partnership toimprove the UK’s digital capability, and we’ve committed to training 1.8 million individuals, SMEs and charities on digital skills including internet banking, by 2020.”