Is your bank ready for the business-first future?

Is your bank ready for the business-first future?

Traditional banks must prioritize SMEs' needs with end-to-end banking experiences to bridge the $5.2 trillion financing gap and compete with fintech.

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Ian Zeifman, Head of Marketing, Financial Services


17 Apr 2024

Is your bank ready for the business-first future?

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Small and midsized enterprises (SMEs) drive a significant portion of the global economy. 

According to the World Bank, they represent more than 50% of employment worldwide and comprise roughly 90% of businesses. In the United States, SMEs make up a staggering 99.7% of employer firms, according to the Federal Reserve. The everyday superheroes who start and run these businesses deserve a standing ovation. However, that's not what many of them receive from their banks, with the World Bank reporting $5.2 trillion in unmet financing needs among SMEs.

Many in the financial services industry recognize that the needs gap is even more significant when you consider the overall banking experience SMEs receive - which fall short of what typical retail consumers and large commercial customers experience. From merchant devices to access to embedded finance and fragmented financial services, SMEs encounter so-so engagement from traditional banks. In this landscape, fintech and all-digital banks are drawing SMEs in with services more aligned to businesses' needs.

Traditional banks can end this customer outflow - and win many back - by taking a business-first approach to working with SMEs. The key: Elevate SME banking with an end-to-end experience that seamlessly addresses multiple pain points.

SMEs need more-tailored options than one-size-fits-all banking

The banking industry is seeing a proliferation of options aimed at SMEs. In the United States, Liberty Bank reaches SMEs with digital-brand Owners Bank, a bank that touts its low fees and easy access to loans. Royal Bank of Canada (RBC) launched a service called Ownr to streamline business registration and incorporation - and help SMEs to bank with RBC. And when it comes to fintechs, Square is the tip of the iceberg, with dozens competing to serve the U.S.-based SME market alone.

How can a traditional bank stand out in this increasingly crowded market? It may not be as difficult as you think. Many fintechs that offer digital banking services feature one of a few options designed to address specific pain points, like integrated invoicing or expense management, along with a fairly basic approach to other traditional banking products. In most cases, traditional banks can offer more-comprehensive services overall, especially to business owners who already use them for personal banking. However, if traditional banks fail to harness and maximize their advantages within a digital banking experience that brings value to owners, they will continue to fall behind fintechs in the market for SMEs.

A strategy and roadmap for SME success

Two foundational elements can propel traditional banks ahead of the competition for SME customers:

  • An experience strategy designed to help owners grow and drive their businesses.
  • A technology roadmap that rapidly enhances the experience with next-generation features that add tangible value.

When these come together, traditional banks can win more business, retain customers longer, and - importantly - increase conversions for offers.

The guiding principle of this approach is to prioritize the needs of businesses and their owners. You look for ways to save them time. For example, enabling role-based access lets business owners grant limited account-management privileges to employees or service providers, such as accountants. Helping them overcome pain points is even more critical. AI-powered cash-flow analysis proactively alerts customers to upcoming credit needs. Automated loan decisioning enhances and speeds their access to credit.

You can also resolve nonbanking financial pain points by including a marketplace for business services in your roadmap. Within the marketplace, SMEs browse third-party services such as payroll, invoicing, and tax - choosing the services appropriate to their needs. Your bank becomes a hub for API-based connectivity that defragments access to essential business services that resolve pain points. Not only does a marketplace help you partner to address a wide range of SME needs, but you also grow new sources of revenue.

Watch SMEs thrive

The Amdocs team developed a proof-of-concept demo that helps you consider business-first banking from a customer's perspective. The demo reconceptualizes SME banking as an experience that puts business needs first. Behind that business-first concept is a backend powered by flexible technology, AI, and advanced analytics. The combination combines a next-gen design with difference-making capabilities, highlighting the potential of an experience-driven strategy that's enabled by the right technology. Contact us to see the demo to follow one SME's steps on the path to financial success.

Get started with business-first banking

Investigate business-first banking at Money 20/20 Asia in Bangkok in April or at Money 20/20 Europe in June. At the Amdocs booth, you can explore the future of SME banking within our in-depth demo. Our banking specialists will be on hand to walk you through the basics of business-first banking. Talk to us today.


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