By FintechOS · May 06, 2020
4 minute read

How to Unlock the Potential of SMEs


There are over 25 million SMEs in the EU generating $850bn of annual revenue for banks, but only 18% are happy with their bank’s service. How can banks tackle today’s threats while seizing tomorrow’s opportunities?

SME banking is at a turning point. Customer demands are shifting, new digital players are targeting unmet meets, and the clever use of tech looks set to decide who’ll dominate the market of the future.

In Europe, the SME opportunity should sharpen every banking leader’s focus. According to Eurostat, there were 24.7 million SMEs in the EU in 2019: they make up over 99% of the businesses in the region, provide jobs for 66% of the working population and outstrip large enterprises when it comes to adding value to the economy.

But only 18% are happy with their bank’s service. SMEs typically need to access finance quickly and seamlessly. Yet the average “time to decision” in traditional banks is between 3 and 5 weeks, while the average “time to cash” is nearly 3 months, according to a McKinsey report.

The opportunity hasn’t gone unnoticed

A large customer base with growing needs means untapped revenues. Digital innovation now offers the power to unlock them, by creating meaningful customer journeys that fit your clients needs and building an ecosystem of value added services.

But it’s an opportunity that hasn’t gone unnoticed, and so the competitive landscape is changing. From fintechs to Big Tech and incumbents ahead of the digital curve, more players are entering the race and speeding up the pace of change.

Challenger banks are quickly gaining market share by offering simple, low-cost products, delivering fast and frictionless customer experiences, and in some cases providing easy-to-use financial tools. But they won’t stop there, of course. Challengers have the customer centric-culture and agility to serve the unmet and evolving needs of SMEs, and their long-term prospects will be determined by their ability to expand the boundaries of the SME banking experience.  With nimble, ambitious and well-funded competitors like these, traditional banks need to take decisive action.

So what should banks do?

In mapping out a strategy for change, SME banking leaders should consider two challenges:

  • How can they confront the threat of nimble, digital-first challengers coming to market with offerings more tailored to SMEs’ needs?
  • And can they compete with challengers while laying the foundations for a service   model that satisfies a broader need set and generates new sources of revenue?

The 4 steps to future-fit SME banking provide the answers. We believe responding to immediate competitive pressures and long-term strategic goals simultaneously is possible, and banks can do it in a way that unlocks value quickly and consistently over time. With the right technology, they can act on these 4 steps,  tackling today’s threats while seizing tomorrow’s opportunities.

It may seem ambitious, but the potential rewards and the risks of inaction are equally great.

For more findings from our whitepaper,  ➡️download from here: Stay tuned for more (to be continued).


About this whitepaper:

We wrote this whitepaper to explain the why and how of the four steps we be believe are critical for future success. We’ve gathered the latest research on the state of the SME banking industry and combined it with insights from SME banking leaders spearheading digital change in their organisations. The result is a clear-eyed view of where the industry is at this moment and the actions banking leaders should take to win in the digital future.



This article is part of a series of FintechOS articles on SME banking. For more findings on this industry,  ➡️download our whitepaper from here:


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