What does the future of SME banking really look like?

It’s been a tough few years for SMEs. The cost-of-living crisis and threat of recession followed hot on the heels of the Covid pandemic pushing many SMEs into recovery mode, with many more at real threat of going under.

The Covid loan scheme offered some respite and the opportunity to access finance more quickly. But in 2023 with repayment of these loans looming, and a wider backdrop of rising costs, high inflation, rising interest rates and supply chain disruption, the pressure on SMEs has only intensified. No wonder they are declining at a rate of 6.5%.

Access to finance is a major problem for SMEs. In fact, the sector currently has unmet finance needs of approximately $5.2 trillion, 1.5 times the current lending market. Alongside the rising cost of debt, there is a growing concern that bank lending criteria is preventing SMEs from accessing the finance they need. Nearly one in three SMEs recently identified working capital and cash flow management as a reason for requiring external finance, but only 45% of respondents felt confident they would be able to secure that finance from their bank.

If banks fail to respond, the consequences are potentially catastrophic. After all, SMEs account for 99.9% of the business population, and around half the turnover of the UK private sector.

An opportunity as yet unrealised

Unmet needs are opportunities for new value creation. But, has digital transformation in SME banking progressed enough to ensure this sector (and the opportunity it represents) survives and thrives?

Unfortunately, the answer is no.

Lack of insight is a huge stumbling block.

The volume and variability of SME businesses makes it difficult to create banking services that meet diverse needs and deliver personalisation at scale.

A new way forward

A new KYC approach is required, one that is rooted in fast, comprehensive, and real time Customer Lifecycle Intelligence. In our latest whitepaper we investigate what this new approach really looks like in practice.

Download your copy now and learn:

• The market trends impacting SME banking
• What SMEs want from financial service providers
• What the modern SME banking ecosystem looks like
• The path forward