SME Banking: Crafting Services for the Next Generation with a Focus on Client Needs

Evmark Business Solutions

SME owners are constantly faced with the challenge of adapting their business strategy to a highly dynamic environment while also managing day-to-day financial operations. This can be compared to Formula 1 racers, where precise and quick decisions are crucial to avoid failure. In this fast-paced business world, SME banking services can play a crucial role in helping business owners navigate their financial needs. By taking a customer-centric approach, banks can design next-generation SME banking solutions that cater to the specific needs of small entrepreneurs.

One of the main issues faced by SMEs is the lack of value they receive from traditional banking providers. Many small business owners have to use multiple services to cover all their financial needs, resulting in a fragmented experience. This highlights the need for more than just basic account services, as banks often fail to meet all the service needs of SMEs. These businesses are looking for support and guidance in managing their finances, understanding where to focus their attention, and interpreting key performance indicators (KPIs). With limited financial experience, SMEs need a clear and simple connection between their financial data and their business in order to make informed decisions for the future.

According to recent research by EY, only 18% of SMEs and self-employed individuals feel that their banks understand their business and have strong relationships with their banking providers. The majority of SMEs expect their financial institutions to have a deeper understanding of their industry and to initiate proactive communication. However, banks have a powerful resource at their disposal – the financial data of SMEs that they gather with their consent. By leveraging this data, banks can offer tailored and customer-centric SME banking solutions, such as cash flow analysis and fund allocation guidance, that align with the expectations of their customers. The EY report also reveals that 82% of SMEs actively endorse data sharing, as they see it as a way to access enhanced services and receive tailored financial advice to fuel their business development efforts. Furthermore, with data from SMEs spanning diverse industries, banks have the potential to facilitate connections among like-minded and complementary clients, fostering the growth of their businesses. In fact, 81% of SMEs would find the offer of tailored networking opportunities very valuable for their business and would be willing to use it.

Barbara Fretter and Maarten Lammens, owners of Solids Development Consult, highlight the limitations of traditional banking services for SMEs. They state, “The bank is helpful with daily things like account administration and even troubleshooting, but they don’t come up with new ideas or technology.”

To meet the evolving needs of SMEs, financial institutions can offer a range of valuable digital services using innovative technologies and next-generation user experience design. These include:

1. AI-powered personal finance advisors: Many banks are now integrating AI into their operations, which can help address the dissatisfaction points of SMEs. According to an EY analysis of over 5,000 SMEs worldwide, 69% of SMEs express frustration about the lack of proactive communication from their banks regarding their businesses, and 76% lack access to tailored financial advice. AI-powered personal finance advisors can bridge this gap by providing SMEs with personalized and proactive financial guidance.

In conclusion, SMEs are in need of more value from their banking providers, and banks have the potential to meet these needs by leveraging the financial data of their SME customers. By taking a customer-centric approach and offering tailored digital services, banks can not only improve their relationships with SMEs but also help these businesses thrive and grow.  

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