Just recently, Recognise Bank has unveiled its growth plan for the next twelve months. At the heart of it are small and medium-sized businesses (SMEs), a segment that the UK digital lender and savings provider is looking to revolutionise through new loans and superior SME banking experiences. Recognise Bank CEO Jean Murphy told Fintech Finance, “Whilst the economy clearly has its challenges, we are nevertheless seeing excellent opportunities to support ambitious and experienced business customers.” 

They’re not the only ones with this aspiration. 

Earlier this week, Hong Kong-native Fusion Bank announced the rollout of its new-gen digital banking services for SMEs, including fast, anywhere-anytime online current account opening. Scottish SME bank Alba has just bagged its banking licence with restrictions in a bid to, as chairman Graeme Jones explained, “design a bank specifically with [small and medium-sized] businesses in mind, helping them to realise their true potential and fulfil their vital role in enhancing both employment and economic growth.” 

Across the pond, Wells Fargo is in the process of launching its revamped business banking platform with major SME-focused improvements. The reboot, called Wells Fargo Vantage, was designed to personalise banking for small and middle-sized business users through AI-powered insights into everything from key performance metrics to customer behaviours.

sme banking insights

The SME banking shake-up is clearly underway, with financial institutions lining up to (better) bank this globally and historically underbanked segment. But what tools and tactics can help banks rise to the challenge? Let’s dive in.

Small businesses and banks: it’s complicated

Contrary to their headcount or turnover, small and medium-sized enterprises have a huge impact on the European economy and job market. According to The European Small Business Finance Outlook 2022, published by the European Investment Fund, SMEs accounted for 99.8% of all non-financial enterprises and 64.4% of total employment, plus generated 51.8% of value added in 2021 alone. 

They’re more than ready to be engaged digitally, too. The pandemic spurred digital technology adoption among small and mid-sized businesses in 2020, forcing many of them to close their physical doors and open digital ones – or open them wider. A Forrester study found that 78% of small businesses want data-driven financial insights. How many actually receive such info from their banks? One in ten, roughly.

SMEs pivoted to meet their customers’ demand for enhanced online services – so why haven’t banks rushed to meet theirs? 

Mainly because small enterprises, especially those on the micro side, are incredibly hard to figure out. They come in all shapes and forms in terms of business type and needs, organisational structure and decision makers, risk profile and capacity for growth. The smaller the enterprise, the more similar their demands are to those of personal or private banking customers, McKinsey points out. Companies on the larger end of the spectrum, however, tend to share characteristics with commercial-banking clients. 

data driven banking solution for smes

Meaning that as a customer segment, small businesses have long been viewed by banks as high risk, low return and hard to please. But with technology on their side, banks now have a real chance to transform these relationships into win-win outcomes. 

Personalised SME banking: no longer a question of how but how soon

“My biggest takeaway was that the range of customers that we serve in this space was not reflected in the tools that we offered our clients,” reflected Reetika Grewal, Wells Fargo’s head of digital, having spent her early days at the financial services giant evaluating its current business offerings. It’s not that Wells Fargo skimped on technology innovation. The problem was that their tools severely lacked customisation options and the ability to push Wells Fargo beyond the one-size-fits-all approach to serving business customers.

SME Stories, the small business banking equivalent of our swipeable money updates solution, was designed to help banks fill in the vacuum. As in, deliver superior digital customer experiences to even the smallest of enterprises along with key insights so they can understand and take control of their financial health.

financial insights for small and medium enterprises

It does so in a way that today’s banking customers are used to: in the form of story-like snapshots, a content format that was trailblazed by Snapchat and took the social media world by storm. In just 7-10 seconds, small business owners can get personalised updates on key financial metrics, such as their daily balance, weekly expense forecast, monthly cash flow trends or a breakdown of expenses by category, from salaries to utilities. Banks can flag if an upcoming transaction is about to push their balance into the red or a customer invoice is overdue for payment. Then, follow up with a loan offer to cover the shortfall or invoice factoring, respectively.

In essence, SME Stories blends data analytics with digital storytelling to take the guesswork out of servicing small businesses with no finance department, CFO or controller. Once connected to the back-end system that processes daily banking transactions and ideally, the customer’s billing software, it sorts and translates data for business owners into a 360-degree view of their financial performance with minimal effort and decision-making on banks’ part. The module can be seamlessly embedded into any UI framework, interface and navigation through an SDK, while only taking up 8% of the user’s screen. 

Would you like to see SME Stories in action? Watch our demo at the 2023 spring edition of FinovateEurope. Do you have questions about how it can deliver value for your SME audience? Download our two-pager or get in touch with us.


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