If banks do not change their approach towards the SME lending business, they risk losing \u2013 forever \u2013 a major portion of this very important customer segment to the alternative SME lenders. It\u2019s therefore the need of the hour for banks to thoroughly review and transform their SME lending business. This white paper provides insights on the market disruptions being rendered by alternative SME lenders, the key challenges faced in banks\u2019 SME lending business, and recommendations for banks on ways to transform their SME lending business.<\/p>\n
Small and medium-sized business enterprises (SMEs) are crucial for the economic growth and competitiveness of any country. Consider this \u2013 in the USA, small businesses comprise 99% of all companies, employ over 50% of the country\u2019s private sector workforce, contribute over 50% of the non-farm GDP, and for the past two decades have created around two\u2010thirds of the net new jobs.<\/p>\n
Similarly, in Australia, nearly 2 million SMEs make up around 70% of all industry employment. In the UK, SMEs employ nearly 60% of the private sector workforce. And most of the innovations across all geographies happen through SMEs.<\/p>\n
From the aforementioned, it is obvious that supporting SMEs\u2019 financial needs is crucial to a country\u2019s growth. Having seen this, it is no wonder that in recent years, policymakers in many countries (for example US, the UK, and the EU) have embarked on initiatives to encourage SME lending. For banks as well, SMEs form a key and loyal customer segment. Unfortunately, despite such positive factors, recent years have seen significant unbundling in the banks\u2019 SME lending business. SME lending on the banks\u2019 balance sheets has decreased significantly, even as their loans to large businesses continue to rise. Consequently, the historically strong relationship between banks and their SME customers has gradually begun to erode. If banks do not change their approach towards SME lending business in earnest, they risk losing \u2013 forever \u2013 a major portion of this very important customer segment.<\/p>\n","protected":false},"excerpt":{"rendered":"
Small and medium-sized business enterprises (SMEs) are vital for the economic growth and competitiveness of any country; hence, supporting the SMEs\u2019 financial needs is crucial. For banks, too, SMEs form a key and loyal customer segment. Unfortunately, in spite of these factors, recent years have seen significant unbundling in the banks\u2019 SME lending business across the globe. Consequently, the historically strong relationship between banks and their SME customers has gradually begun eroding.<\/p>\n","protected":false},"featured_media":47297,"template":"","meta":{"pmpro_default_level":"","tdm_status":"","tdm_grid_status":""},"product_brand":[],"product_cat":[1842,2347],"product_tag":[3475,2311],"class_list":["post-76225","product","type-product","status-publish","has-post-thumbnail","product_cat-sme-finance","product_cat-study-library","product_tag-2016-2020","product_tag-infosys-finacle","pmpro-has-access","first","instock","shipping-taxable","product-type-external"],"yoast_head":"\n