The SME banking and finance landscape today is highly digitized. Online banking services and mobile applications have been used by almost half of SMEs, and visits to ATMs and branches have decreased by 38%. This trend does set to continue as more customers prefer card payments and mobile banking. What can SMEs expect from these changes? Here are some key points to consider.
Digital Solutions
One of the main challenges that traditional banks face when serving SMEs is aging digital solutions. Until recently, banks tended to focus on enterprise and high-volume retail segments. These limited options available to SMEs, which is why neobanks have stepped in to fill this gap. However, traditional banks still lag behind in terms of their SME offerings.
Banks are already thinking about how to best position themselves in this sector and identifying partners to help them deliver innovative propositions at scale, but if they don’t, they’re missing out on a multibillion-dollar opportunity. While SMEs haven’t yet made a rush to leave their incumbent banks for new digital players, Accenture’s survey of global SMEs indicates that this could change in the near future.
In order to create new customer experiences, banks must pay attention to SMEs’ needs and preferences. These businesses often value transparency, speed, automation, and the ability to interact with a human being. By doing so, they can foster customer loyalty and enhance customer satisfaction. Similarly, banks can enhance their existing channels by leveraging the capabilities of their vendors. They can also implement new in-house solutions to make them more appealing to SMEs.
Embedded Finance
Embedded finance is a technology solution that removes many of the pain points that consumers experience. It increases brand loyalty and consumer satisfaction, which in turn increases the profit from repeat business. With the right technology, businesses can understand consumer needs and spending habits and tailor their products accordingly.
Embedded Finance enables contextual opportunities for SMEs by providing finance when and where they need it. Companies that have adopted embedded finance have reported increased customer engagement and are winning market share. According to a Plaid survey, Embedded Finance may capture as much as 26% of the SME market by 2025, generating revenues worth more than $124 million. Traditional organizations need to adapt or risk being left behind by this disruptive technology.
Embedded finance makes financial services easier to access by integrating them into business infrastructure. Embedded finance removes the need for customers to navigate to a third-party destination for financial services. Embedded finance is a trend that is driving a shift away from traditional banks and enables innovative business models. Embedded finance is used by service providers to integrate their financial services into their websites or mobile app. Embedded finance solutions are an extension of the brand’s identity and provide seamless customer experiences.
Online and Mobile Banking
With the advent of new technologies, financial institutions are implementing new features and functionalities to help SMEs stay on top of their financial transactions. With the growing need for cash management, cost savings, and a seamless customer experience, SMEs are looking for banks that can guide them through the process. This article will examine the best practices for mobile banking for SMEs. It also discusses the benefits of borderless accounts.
One of the biggest benefits of mobile and online banking for SMEs is convenience. SMEs can complete more banking tasks with less effort than ever. This can save both money and time. SMEs have the ability to make decisions faster, allowing them to make more informed decisions. They can also access a wider range of financial products and services. Moreover, a survey shows that 80 percent of companies agree that mobile banking saves them time. As a result, more small companies should be able to rely on this service. Another study shows that megabanks dominate the market for small businesses, accounting for over two-thirds. Researchers do believe that technology plays a vital role in this trend.
SMEs are redefining the relationship with their financial institutions. Traditionally, SMEs were bound by the shackles of traditional banking and are embracing on-demand, digital services that help them manage their financials more effectively. In order to remain competitive in this new age, incumbent banks must evolve and provide new services to SMEs. They must meet their demands quickly and compete with fintech firms. This is not an easy task, but banks must be quick to respond to changing consumer preferences.
Distributed Ledger Technologies
The applicability of distributed ledger technologies in the SME banking and finance landscape involves the use of blockchain-based platform services to offer a suite of financial services to SMEs. The services offered by such platforms include asset registration, trade, and logistics information, regulatory audit, credit evaluation, and more. Each node on the platform maintains a shared distributed ledger and accesses data based on the needs of the node.
Blockchain-based financing platforms can improve financial credit support for SMEs by reducing information asymmetries and enhancing the efficiency of trading. These applications provide increased visibility into the receivables lifecycle and associated trade transaction information, enabling finance providers to make informed lending decisions. Additionally, such technologies provide verifiable data on SMEs’ past payment history and creditworthiness. By making this information readily accessible, finance providers will be able to provide better credit assessments and speed up loan approvals. While the adoption of blockchain technology in SME banking and finance will not happen overnight, it will be a critical step in the evolution of SME banking and finance.
Stock Exchanges’ Focus on SMEs
The SME sector is an increasingly important segment of the stock market, with most prime stock market operators focusing on the sector and developing specific platforms for SMEs. Such exchanges, also known as SME-focused stock exchanges, have fewer admission requirements than regulated markets. These exchanges are increasingly a valuable option for SMEs in terms of fundraising and may help them gain access to capital and grow their business.
Conclusion
When it comes to financial institutions, small and medium-sized enterprises are an increasingly important market. These businesses contribute one-fifth of global banking revenues and are projected to grow seven to ten percent annually over the next five years. However, their credit quality is wildly variable, making it challenging to find the right balance between cost to serve and customer experience. Unfortunately, many banks have not given these customers the attention they deserve.