How ready are European banks to serve the SME segment? 

95% of European banks say SMEs already make up more than 20% of their balance sheet. Only 20% consider their SME proposition up to date. 

SME banking is no longer a residual segment. In our survey of 60 senior banking leaders across France, Italy and the Benelux, 95% said SMEs make up at least a fifth of their balance sheet. Globally, SME banking revenue is growing faster than retail or corporate banking (McKinsey, 2025). As retail matures and offers fewer new opportunities, SMEs have become a key growth engine for many banks.

Yet most banks still can’t move at the pace SMEs expect. Only 1 in 5 consider their SME proposition up to date. 85% rely on basic, easy-to-compare products such as overdrafts, credit lines and business cards as a main source of SME income. These products push banks into price competition. Only 18% can activate an SME account on the same day or near-instantly. Legacy cores, fragmented data and complex internal processes slow down onboarding, personalisation and partner integration.

Meanwhile, fintechs are moving in. They target niches such as mid-sized lending, where speed matters more than price. SMEs are also becoming more willing to switch for better terms, so loyalty can no longer be taken for granted. Banks still hold the main banking relationship, and the ones that act now can defend it.

This report combines a quantitative survey fielded by Ipsos with in-depth interviews with senior European banking practitioners. It shows where banks stand today, where the growth opportunities are, and what it takes to build lasting SME relationships without a full core replacement.