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FF Virtual Arena: Easing Payments & The Future of SME Banking

When the pandemic was in full swing, a number of SMEs were started. Many of them required some form of aid to get off the ground and were, in turn, let down by both banks and the government support schemes. They were neglected. Running a small business is incredibly hard, after all, and not all are able to succeed on their own merit. That’s where VCita, Tide, and Metro Bank come into the picture. In a Virtual Arena with our own Douglas Mackenzie, we talked with these three businesses on how SMEs can be supported, where their key issues lie, and where the future of SMEs is.

So what was the state of banking for SMEs before Covid? And what changed? We can pin it down to digitization. While we saw a gradual increase in that jump to online banking, and that smaller businesses were already taking that leap, Covid massively propelled that evolution. It isn’t an over exaggeration to say that the rapid acceleration of technology gave us a few years worth of change in just a few months. After all, people didn’t want to physically handle their money. Only now are we seeing a slow return to cash, though not in the same way as before.

Not only that, but SMEs could not come to the local bank’s branch and make those face-to-face partnerships because of the pandemic. Rather than a bit-by-bit transformation, the leap to digital was very much a literal leap both to survive and to keep up with competitors.

We talk a lot about how digitization can help unlock a business’ potential in the current age, and how it improves their efficiency, but more importantly it provides a record – a footprint – of their existence. A lot of SMEs didn’t have this and, when applying for a PPE scheme, couldn’t get approved because there wasn’t a good record of their existence.

Digitization is only one facet of the current SME climate, however.

As Adi Engel, CMO of VCita, points out; “when we’re looking at small businesses, you can tie everything to cash flow. Is it about how I am better utilizing my time to service more clients? And how am I chasing them for payments? How am I creating a financial buffer for myself? All of this, and a lot of the digital solutions that are evolving, are around having that 360 view of your cash flow and putting it in the context of your business.”

In other words, it’s hard to not see cash flow as the root of every other issue that SMEs face.

We mentioned earlier in the article that SMEs were feeling let down by their banks before Covid and during the height of it. Flipping that around to a more positive feeling, however, how can banks look to better help their SME customers? How can they go on to improve a business’ financial wellbeing? After all, SME owners are often time poor. In fact, a number of SMEs are reliant on their owners and second-in-commands to perform a lot of the legwork.

Clarity and visibility are two of the most important methods but Kat Robinson, Customer Experience Director from Metro Bank, also saw less obvious methods. She highlighted that data is a crucial factor in this.

“We should no longer have to ask a customer what their father-in-law’s inside leg measurement is when they’re applying for a loan because we should know, because we have this wealth of data. It’s also thinking beyond the obvious in terms of payments; it’s some of the extra things that we can do to really help and support our customers.”

On the other side, VCita helps SMEs through their digital app. In enterprise language, one might refer to VCita as a CRM – though they would never call themselves that to a customer. They view this climate as one of creating and capitalizing on opportunities. After all, an SME might not see every opportunity. They make decisions over a few seconds if not immediately. VCita are looking to condense a lot of decision making and business models into a small app; that is by no means an easy feat. Adi even mentions that over 200 individual features are being delivered.

Improving an SME’s financial wellbeing is a huge challenge in customer experience. It can be overcome, however. Once you drive experiences forward based on value, you unlock that SME and open it up to further digitization as well as accessibility. There’s something to be said about cooperation too. Supporting an SME is more than just helping them save time and money. Businesses, such as Metro Bank, can help SMEs succeed by connecting them together and establishing partnerships; they can weave together a network that benefits all involved.

Speaking of customer experience, where does Tide sit in this? They are at the forefront of seeing new demands from tech-savvy SME owners and creators. What new demands have they identified when it comes to business banking? Oliver Prill, CEO of Tide, highlights an interesting point.

“I’m not sure whether [those demands] are new, they’re just getting more intense. Whether it’s about time, convenience, or intuitiveness, […] the reason why business banking is so broken is because we think ‘business banking’ is the wrong definition.”

Tide focuses on connectivity and workflow. An invoice is written, it is chased, it needs to be accounted for, all these workflows create an inefficient chain and cuts across different products. They work to create a workflow where everything flows seamlessly together. In fact, business owners don’t like financial administration & technology. It’s a necessary evil. Tide helps take on the burden of that necessary evil. People no longer want to spend time learning technology. Everything has to function perfectly. They don’t react well when it doesn’t work. New demands should instead be referred to as raising demands because of this; there’s little sympathy for things that don’t work well.

In other words, some people don’t like to change. Change is met with resistance. If someone already knows pen and paper methods, that jump to digital is harder for them.

So what’s the future for SME banking? There will definitely be a move back to human-to-human interaction. We are, down to our core, social creatures. We value that personal connection. Yet we won’t be going completely back to cash. Contactless, at least in the UK, has become such a valued convenience.

SMEs are diverse. Extremely so. Each one has different needs, different demands, and will need different propositions. There won’t be one model that succeeds – it’s not a “one size fits all” economy. Multiple models will be needed. So creating that diversity, connecting SMEs together, and adapting to the hybrid personal/digital climate we’re entering is the future of SME banking.



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