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Banks’ small business imperative

New strategies for offering digital services for SMEs

When it comes to the development of digital services, banks in Western Europe have neglected the needs of small and medium-sized enterprises (SMEs). Banks have successfully delivered a steady stream of new digital services to their vast retail bases. But they haven’t done the same for their SME clients. And it won’t be long before market pressures will compel banks to do so.

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The competition for SMEs’ business is coming in part from technology companies, whose innovations in the areas of financing or enhanced self-service are giving SMEs new options. Although SMEs’ use of these services has been piecemeal rather than broad-based, the adoption curve is sloping up rapidly. And there is every reason to believe it will become steeper.

To keep the new competition — and faster-moving banks — from attacking this part of their customer base, banks are going to have to vastly improve the digital services they offer SMEs. This will mean developing higher levels of personalization, enhanced opportunities for SMEs to access financing online, and more cost-efficient ways for SMEs to manage their foreign exchange transactions. The banks also need to develop true multichannel offerings, so that SME customers can access the same services on a smartphone, tablet, or PC that they can get by walking into a branch office. This will require banks to make investments in the parts of their business that cater to SME customers. The good news is that banks will get substantial benefits from transforming the digital experience for their SME clients — including efficiencies that lead to lower costs and increases in customer satisfaction and loyalty.