SMEs Come In Many Shapes And Sizes, But They Want The Same Things!

By Mark Hartley, the CEO and Founder of BankiFi

SMEs come in many different shapes and sizes, but that doesn’t mean they all want different things from their business banking partners. In fact, when push comes to shove, most small business owners are largely interested in similar things. For some time, this fact was ignored by certain sections of the financial ecosystem, but legacy financial institutions, as well as some neobanks are now beginning to respond.

Put simply, small-business owners want to spend more time running their business and minimise their administrative duties. Right now, with the escalating cost of living crisis, small business owners need solutions like this more than ever and are actively searching for tools that help to streamline time-consuming business admin tasks. At the same time, SMEs are looking for solutions that enable them to get paid faster.

SERVING THE NEED

Despite a decade of fintech innovation, there’s still a lack of solutions designed to address these challenges. It could be argued that this alone highlights how low down on the priority list SMEs are here. This inactivity is happening amidst a worsening late payment crisis in both Europe and the United States. For context, in the UK, SMEs are owed an average of £250k in late payments, while in the US that figure stands at $304,066.

Banks and neobanks with a physical dimension seem to be realising the need to respond to this demand. We’ve seen it first hand at BankiFi. As a business, we increasingly find ourselves partnering with traditional financial institutions to create new solutions that address long-standing pain points within the SME community. Early customer data shows that these solutions are not only useful, but incredibly popular.

PUTTING THE PRODUCT FIRST

In recognising this shift, banks and neobanks with a physical dimension have been able to steal a march on digital-only alternatives. In fact, despite the help of government-backed initiatives, such as the Banking Competition Remedies (BCR), which ringfenced money specifically to help neobanks, there remains a clear preference among SME owners to choose legacy institutions as their business banking partner.

Banks and neobanks that retain a physical dimension have been able to build product solutions that are more catered to the demands of SMEs with help from financial technology bodies, such as BankiFi. This could be because traditional financial institutions, such as banks, are more likely to rank product-focused solutions when looking to serve SMEs. By contrast, digital only neobanks tend to value other concepts, such as customer engagement, which is indeed important, however less relevant.

HUMAN TO HUMAN STILL THE BEST

On top of this, many SMEs still value the face-to-face interactions they’re able to get by working with banks and neobanks that retain a physical dimension. While some digital-only neobanks have taken steps to improve their customer service capabilities in recent times, it’s impossible to replicate the convenience of popping into a local bank branch and communicating with a real-person who understands the needs of your business.

This demand for personalised service has only grown in recent years, with notable events like COVID-19 and the cost-of-living crisis shaking the confidence of small business owners. In moments of uncertainty, individuals retreat to those who they know they can trust and who can provide advice that is genuinely useful to their business, while delivering services and products that really move the needle.

FINDING THE RIGHT APPROACH

Digital-only neobanks need to reassess how they serve SME customers if they want to gain a larger market share. While innovation is important, it should not come at the expense of understanding the basic needs of SMEs. Offering a more technologically advanced platform is not enough to win over SMEs alone. These customers continue to prefer the products and personalized support provided by traditional banks instead.

Financial institutions of this size have realized that while SMEs can vary, they normally require the same things. Most small-business owners want to spend more time running their business and to minimize their administrative duties, focusing instead on core business activities. To do this, many traditional financial institutions are partnering with companies like BankiFi to create solutions designed specifically for SME owners.

WHY BANKS ARE STILL AT THE HEART OF BUSINESS

For example, our ‘Pay and Get Paid’ solution, which can be white labelled by banks and other financial institutions, has been found to help SMEs get paid in one to two days on average. Crucially, that’s one to two days from the date an invoice was created, not the due date, which suggests that people are getting paid significantly in advance of the invoice due date, thus helping to free up cash flow.

As a business, we understand the inherent benefits that banks and physical neobanks can deliver for SMEs clients. At the same time, we’re seeing the greater appetite of these companies to partner with businesses like BankiFi and provide powerful solutions that have been catered to the real needs of SME businesses, and that enable more time and resources to be dedicated to core business objectives.

For more information about BankiFi, please visit: https://www.bankifi.com/