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Why banks need to get personal

Future banking
By Kyle Ferguson, Chief Executive Officer

As technology and customer expectations have evolved, so too have the demands of SMEs. Driven by experiences and offerings in our personal lives and younger, more tech-savvy employees entering the workforce, these often more agile organisations are now demanding a better digital approach.

For the majority of banks, the SME market is becoming a key target sector, yet, most are currently failing to deliver the products and services SMEs desire. With such a lucrative market crying out for attention, banks must get personal to answer their demands. But what is driving this demand and where should banks start?

Personalised services

Thanks to technological innovation, customer service has come on leaps and bounds in the world of consumer banking. We now have seamless mobile transactions, highly responsive customer service and fast transaction times. However, business banking is lagging far behind in these areas with SMEs wanting banks to offer the same service they get from banking in their personal lives and it’s clear to see why!

While personal bank statements typically update in real-time and can be viewed on a mobile device, reconciliation of work-based expenditures can take days, if not weeks to process. Procurement generates reams of paper invoices and purchasing orders. By contrast, personal mobile wallets pay, log receipts and reconcile on bank statements in the blink of an eye. It is therefore unsurprising that SMEs are demanding banks provide the same level of service and personalised experience we have become so used to in our personal lives.

Increased digital capabilities

According to our recent survey, 95% of commercial clients who bank digitally in their personal lives, expect to do so at work as well. We also found that the digital services which SMEs value most include real-time accessibility, access to online and mobile banking and a fast turnaround specifically relating to problem rectification, credit applications, account balance and fee enquiries. It’s clear from this that SMEs now want the same apps and platforms they get as personal customers to be available to their businesses.

The lack of technology available to SMEs is demonstrated by the fact that just 43% of SMEs claim to have near real-time control over business spend, while almost a third feel they have very little visibility on a day-to-day basis. This lack of visibility and the need to regularly go back and interrogate audit trails can be a drag on a business’ efficiency and productivity.

It is therefore hugely important that banks address the disparity between what SMEs need and what is being provided in order to give SMEs the tools needed to gain the real-time view of spending they require.

Understanding SMEs

In our recent report into the SME market, just 12% of UK SMEs said they thought that banks their organisation had dealt with over the past year fully understood their needs as a business. This is a shocking statistic that suggests to us there has been a breakdown in the engagement process between banks and SMEs.

Banks must address these perceptions and learn to speak the same language as their SME customers; after all, they should be seen as an enabler of agility rather than a potential stumbling block. If banks fail to communicate effectively and offer the service and products needed by these customers, they stand to lose out on a highly lucrative market.

Implementing the right solution

Partnering with fintechs is one of the most effective ways for banks to create a more personal approach to banking for SME customers. Fintechs are often best placed to help banks better understand the consumerisation of business processes and technologies today; the eagerness of SMEs to adopt these to achieve enhanced agility; and the frustration they feel if they sense that banks are effectively not speaking their language.

For banks, these partnerships, and generally offering SMEs the levels of service they are demanding, will enable them to build lasting, more trust-based relationships with this key customer segment while SMEs achieve streamlined efficiencies and greater business agility.