Seven Banking Leaders on the Future of SME Banking: Five Takeaways

Seven Banking Leaders on the Future of SME Banking: Five Takeaways

SME bankers are looking for the silver bullet that will make it easier for them to serve this segment of customers – but is there one?

9 September 2021
SME Banking
SME Lending

About 25 million small and medium-sized enterprises (SMEs) are present (1) in the European continent, accounting for more than half of Europe’s GDP. In the US, there are 30 million SMEs generating about two-thirds of jobs in the private sector (2). If you cross the pond to the Asia-Pacific region, you will find that SMEs comprise 98% of enterprises and employ 50% of the workforce (3).

Owing to the significance of SMEs to economies and given the COVID-19 pandemic’s huge impact on SME cash flow, both governments and banks worldwide are finding ways to provide small businesses with stable finance and personalized services designed to help them manage their business better.

Many banks have started to adopt and leverage top-notch technologies to expand their digital offering for SMEs – but have they succeeded in serving this segment of customers better? Have they found the silver bullet yet?

Earlier in 2021, FintechOS partnered with Efma to poll 40 global SME bankers on the challenges and emerging initiatives in SME banking. We explored the topic further by interviewing SME bankers and experts in our community and compiled the most important learnings in a new report– “Seven Banking Leaders on Fintechs, Challenges and the Future of SME Banking”. Please find below the five takeaways from this report:

#1 Banks need to revitalize the ways they lend much-needed capital to businesses

Official statistics show that about 40% of formal micro, small and medium enterprises in developing countries have an unmet financing need of $5.2 trillion every year (4).

“It is of the utmost importance to revitalize the methods banks use to lend much-needed capital to businesses – no matter how large or small they are”, said Tunde Kehinde, Co-Founder and CEO at Lidya, a financial institution that provides access to credit and finance across frontier and emerging markets.

The trend in SME banking follows the trend in retail banking, where emerging entrants like neobanks, challenger banks, BigTechs, retailers, telcos and so on have pushed banks to embed technology in their business models and accelerate digital transformation to meet shifting customer needs.

All executives and experts polled or interviewed during FintechOS’ research on SME banking pointed out the strategic role of digitization in unlocking the full opportunities of the SME market.

Sue Douthwaite, Financial Services Non-Executive Director and Board Advisor

Digitization is important to banks as speed to information and support is often a point of friction for their customers.

#2 Any initiative starts with “continuous learning”

Patrick Pfaff, responsible for ABN AMRO’s services for SMEs, placed the importance of learning at the top of the list, while Raluca Nicolescu, CFA SME Director at Raiffeisen Bank, used the word “learning” several times throughout the interview.

A good learning example comes from HSBC, which recently launched HSBC Kinetic, a new mobile business banking service designed to help SMEs manage their finances 24/7 from a smartphone. HSBC Kinetic was developed using insights from over 3,000 small business owners, Martin Hyde, Head of HSBC Kinetic revealed in the interview5.

Ionuț Encescu, Head of Products at First Bank, mentioned three key digital initiatives that place the customer at the center:

  • Creating best in class lending processes,
  • Developing high quality UX and UI mobile and internet banking interfaces for customers and
  • Building a reliable and resilient service ecosystem, a task he described as “mandatory”.

#3 Banks are moving away from a product-oriented mentality to a customer-centric one

Raul Risnita, Head of Companies Digitization Department at Banca Transilvania, observed that in recent years, banks “have struggled” to change their mentality from product-oriented to customer-centric, from risk adversity to failing fast, from waterfall to agile. “But I believe fintechs have accelerated the process for banks and have set up a new standard of approach,” he said.

Raul Risnita, Head of Companies Digitization Department at Banca Transilvania

Our focus is to develop a well-established online infrastructure of digital products that have the capability to cover all customers’ basic banking needs.

#4 Initiatives go beyond digital transformation

Raluca Nicolescu, CFA SME Director at Raiffeisen Bank, told us that “Factory by Raiffeisen” is the bank’s “flagship program”, dedicated to start-up entities and young entrepreneurs, “which brings in not only finance, but also mentoring, and educational components.”

Raluca Nicolescu, CFA SME Director at Raiffeisen Bank

Our initiatives go beyond digital transformation and reach the service model and sustainability topics, the blended result being a consistent, smooth, and intuitive experience for our SMEs.

#5 Human interactions remain key

Andrei Gaman, Commercial VP Banking Europe at FintechOS, agrees that digitization is fundamentally important, yet also drew attention to the importance of the human factor amid the digital banking revolution. Phygital remains a popular strategy for banks.

“Digital banking is on the rise, but human interactions remain key in many scenarios”, he observed.

Andrei Gaman, like other specialists in the industry, thinks digital elements of the customer journey should work together to allow SME customers to view and discuss products and services in a physical environment.

Andrei Gaman, Commercial VP Banking Europe at FintechOS

Digital banking is on the rise, but human interactions remain key in many scenarios.

Still looking for the silver bullet

No matter the strategies they may embrace – whether related to internal transformation, digitization, customers, partnerships and so on – one thing seems to be certain. SME bankers haven’t found the silver bullet that makes overnight transformation possible. The process is ongoing and – as they pointed out during interviews – serving SMEs better involves continuous learning and innovation.

For traditional banks, SME lending – which will be more driven by data and insights in the future – has emerged as a priority area for digital innovation because it represents an opportunity to tackle high costs, boost customer experience and catch up with the newcomers setting the pace of change.



(1) –

(2) – Small- and Medium-Sized Enterprises (SMEs) | United States Trade Representative (

(3) –

(4) – The International Finance Corporation – MSME Finance Gap , 2017

(5) –


Register now to get a copy of our report, “Seven Banking Leaders on Fintechs, Challenges and the Future of SME Banking”.

For more findings on this industry, follow the Insights section on our website.


Read more whitepapers on the same topic:

Digital-First SME Banking — Efma

10 Key Findings from the Efma Survey on SME Banking

SME Lending – How data and tech can bring a surge for banks


Related articles:

The SME Financing Challenge: Why Digitization Matters

What’s Gone Wrong with Traditional SME Lending – And How to Fix It

SME Banking: Weathering the Storm

SME Banks Need to Act Fast: Responding to The Wave of Newcomers

Cov-19 Response: Banks will have to rise to new digital expectations

What’s Gone Wrong with Traditional SME Banking

How to Unlock the Potential of SMEs

Underserved SMEs: 4 Steps for Banks to Tap the Market