Banks must empower SME clients with more than a repackaged retail account
Banks have traditionally failed to cater to customers in the small and medium-sized enterprises (SMEs) segment because banks incorrectly offer repacked retail products.
“Once you strip back a lot of the functionality in retail banking it’s more about experience than solving issues,” says Laurence Kriger, chief operating officer (COO) at UK SME bank, Tide.
Krieger spoke on a webinar conducted by FinTech Futures and Torry Harris Integration Solutions (THIS).
“A lot of the buzz and a lot of the hype has been in the retail space. There are very large numbers you can get in that sector and clearly there is a lot of activity there.
“What excites me about working with SMEs is that we’re solving real issues and pain points.
“SMEs have been underserved and in the past banks have rebadged the retail product for SMEs, and maybe adapted a little for their corporate customers.
“The reason why it is often underserved as a market is that “SME” can often mean so many different things. It’s an incredibly complex and diverse market. A hairdresser is different to an IT consulting firm.
“A business will go through an evolutionary lifecycle. It may start as a one-man band, grow to 500 employees and still fit under the SME umbrella.”
A 2019 survey from Fraedom revealed that 95% of businesses would prefer their bank offered consistent digital services like those available to retail customers.
Karthik T.S, head of the centre of excellence at THIS, believes that the opportunities for SMEs are “now greater than ever before”.
He adds: “Traditionally they have relied on physical contact and a known environment for their business.
“Considering what’s going on in the world now [the COVID-19 pandemic] this has been jeopardised. Many are also facing economic constraints.
“SMEs need a new way to reach out to customers. They need empowerment.
“SMEs have traditionally been reluctant to invest in anything that has long-term payback. They need solutions right here and right now. That provides ample opportunities for the banks.
Karthik says Banks can offer IT services and products combined with the core financial offering. It’s not just about a loan or credit advice.
“SMEs have a need to expose their inventory for consumption. This could be supported by a bank through the provision of tools to enable them to access the market. This could be done internally or through the use of a third-party provider.
“Banks can also provide an introductory service, connecting their SME clients with potential customers outside of their sphere of influence.
“More importantly, banks could provide engagement services to uplift the digital skills of the SME clients to help them deal with an increasingly digitalised world.”
By Alex Hamilton, deputy editor, FinTech Futures
FinTech Futures and Torry Harris Integration Solutions recently held a free webinar, Empowering your SME customers for the new digital normal, available on demand now. Click here to listen to the webinar.