Addressing the global call for tailored SME Banking services

The landscape of banking is poised for a significant shift, and at its epicenter lies the untapped potential of Small and Medium-sized Enterprises (SMEs).

The International Finance Corporation estimates that 40% of micro, small and medium businesses in developing countries (some 65 million enterprises) have an unmet financing need of US$5.2 trillion every year, which is equivalent to 1.4 times the current level of the global SME lending.

These enterprises, collectively represent a segment that's been largely overlooked in the banking sector. Indeed, SME banking has historically faced neglect, primarily due to perceived risks associated with the customer base and their relatively smaller size, which often translated to lower perceived profitability. Yet, with the digital revolution sweeping across industries, banks are awakening to the power of technology to fuel growth in SME banking.

Navigating challenges in SME banking digital transformation

Achieving success requires a balanced hybrid strategy. This involves providing quick, efficient digital experiences for straightforward tasks like onboarding, while offering extensive advisory assistance for more intricate activities. Fortunately, thanks to new technologies, this is achievable.

With technology decisions becoming increasingly visible at board level, banking executives place their utmost emphasis on harnessing “technology” to drive “growth”. For example, Gartner strongly recommends Commercial Banking CIOs to swiftly embrace Open/External APIs, hyperautomation, public clouds, KYC, and AML due to their established maturity and widespread adoption.

However, challenges loom large.

The global SME Banking survey conducted among SME bankers by VeriPark and Qorus validates that the SME banking industry still has significant ground to cover.

The survey reveals that 55% of SME bankers perceive their digital maturity as lower or at the lowest rung, encountering hurdles like resource constraints, outdated systems, and regulatory complexities in innovating and expanding services for SMEs.

Traditional paperwork still persists, and the most frequently used communication channels continue to be assisted ones like the phone (contact center) and face-to-face interactions (branch). This preference for assisted channels, often disconnected from real-time digital options, invariably leads to service delays. Consequently, 75% of SME bankers identify providing timely and efficient service as their most significant challenge when serving SME customers.

The adoption of AI and ML tools for risk management or loan origination processes remains underutilized, with over half (61%) acknowledging lengthy SME loan approval processes, even for smaller amounts.

Unlocking the future of SME banking: Insights from the 'Five Maturity Levels of SME Banking' Report

To help SME bankers navigate this evolving landscape, VeriPark and Qorus have collaborated on a comprehensive report, 'The Five Maturity Levels of SME Banking,' drawing insights from SME banking executives worldwide. An expert research team from VeriPark and Qorus studied six key dimensions of the SME banking segment (acquisition and onboarding, servicing model, customer experience, value proposition, data management, risk management) and then rated them on a scale of five digital maturity levels.

The report provides banks with a roadmap to transform their service offering and so grow their SME market share. It shows you how to analyze your current SME banking maturity level, create a strategy to grow your SME customer base, and how to benchmark your progress. It guides you through the steps from digital transformation to market disruption and provides best practice examples from successful pioneers.

Our report shows you how you can develop a specific SME banking strategy to unlock that potential and increase customer acquisitions. It involves carefully curating a hybrid approach to modern business banking that delivers fast, efficient digital experiences for straightforward processes, such as onboarding. At the same time, it requires banks to play to their traditional strengths of providing SMEs with comprehensive advice to meet their more complex financing needs.

Our SME banking report sets out how you can measure your ability to meet those needs and what you need to do to address gaps in your service offering. It draws on our research to help you examine your ability to compete with challenger organizations. In it, you will find the answers to the following questions:

Digital maturity– how do you compare to your banking peers?
Innovation challenges – what’s stopping banks from meeting SME banking needs?
Onboarding and acquisition challenges – what are the pain points for SMEs?
Preferred communication channels – do SMEs prefer face-to-face or remote conversations for advice?
Service offerings – what are the biggest challenges and priority investments for banks targeting SME customers?
Improvements – how can banks enhance the commercial banking experience for SME customers?
Risk and data management challenges – why are these the most difficult issues for banks to manage?
Key growth areas – which products and services are the top three growth areas in SME banking?

Since its release in June 2023, the 'Five Maturity Levels of SME Banking' report has gained considerable acclaim among banks focusing on SMEs. Several banks have used it for self-assessment, prompting improvements in their internal strategies to achieve higher maturity levels. Ready to join this journey? Explore how to transform your SME approach and expand your customer base.