Digital innovation has made our world more connected, and to some degree, easier. For SMEs, technology has afforded entrepreneurs the opportunity to launch and manage businesses efficiently. But, when it comes to banking, small to medium business owners come with specific needs. Traditional banking products and services don’t necessarily cater to their unique needs. This has created a gap – and fintech solutions are ready to fill the void. KPMG Matchi has unpacked some of the global trends surrounding business banking.
1) Customer experience is king
There is a move towards improved SME customer experience, which was previously the main focus for retail clients only. Product design will now be tailored for different types of business and will depend strongly on data insights.
2) Specialised trade finance solutions
Supply chain finance is an integral, but laborious and error ridden part of commercial banking. New technology solutions (such as DLT) will increase as they reduce the friction and decrease the cash cycle.
3) APIs become mainstream
Banks will also use APIs to integrate data from different external sources into various products and services on their menu. The proliferation of APIs will create a challenge in the form of multiple API standards, creating a need for API brokers to help banks adjust to the situation.
4) Providing non-lending services
Banks are starting to increase their fee based services, offering services such as risk management and advisory. They will also start assisting their clients by offering business services such as compliance and liquidity management.
5) System integration between client and bank
Systems have traditionally been modular like treasury, forex, payroll etc. Banks are starting to offer integrated systems for simpler processing between client and bank.
6) Focus on SMEs
Small businesses are seen as a high growth sector if given support, especially in non-lending solutions. Banks are investing resources in small businesses as a precursor to growing them into wholesale clients.
7) Digitising and automation
Business bankers relied on high touch interactions but these have given way to customer demands for greater digitization. Reducing friction in commercial banking will be a focus area.
8) Marketplace lenders a key competitor
Low cost, technology driven competitors with superior credit models pose an increasing threat. Banks need to respond using innovative approach, despite their legacy costs and constraints.
9) Fintech collaboration
Retail banking previously dominated the fintech landscape, but this has changed. There are an increasing number of fintechs who are establishing solutions to compete with business banks, notably P2P platforms.
10) Faster commercial payments
Real-time or same-day payments are becoming crucial for commercial clients. Faster payments lead to better cash flow cycles – which are the heart of smaller businesses.
Digitisation is certainly changing the SME banking landscape. Existing business models need to be adapted to accommodate digital innovations. The customer journey and customer experience will become a focus area. KPMG Matchi is ready to help you find a fintech solution that meets your SME banking needs. Speak to us today.