SME banking | Can we serve SMEs better | FintechOS

SMEs have a painful problem these days: their own viability. What can banks do to serve them better and capture this lucrative but demanding market?

Because of their size – by definition, they employ less than 250 employees in Europe – SMEs sit in the no world ’ sulfur land between retail and corporate bank. Yet their contribution to the economy and society is staggering. In the European Union, for exemplify, SMEs score for a strike 99.8 percentage of all employer firms – 65 percentage of private-sector use, according to Eurostat .
SMEs are besides an authoritative generator of business for fiscal services players. Each year, they generate $ 850 billion globally in tax income for banks. That accounts for 20 % of global bank revenues .

sternly hit

Yet their prosperity has been hit by the COVID-19 crisis, according to a McKinsey survey of more than 2,200 SMEs in five european countries—France, Germany, Italy, Spain and the United Kingdom – conducted in August 2020 :

  • Some 70 percentage said their revenues had declined as a leave of the pandemic, with severe knock-on effects ;
  • One in five was concerned they might default on loans and have to lay off employees ;
  • 28 percentage feared they would have to cancel growth projects ;
  • In aggregate, more than half felt their businesses may not survive longer than 12 months ;

In short, the major problem that SMEs are presently facing is their own viability, the International Monetary Fund reveals .
The jobs at hazard due to COVID-19–related SME business failures represent 3.1 percentage of private-sector employment .
“ Despite their importance, SMEs are exposed to a major vulnerability – they are critically pendent on debt, specially bank loans, for finance ( … ) During a crisis such as COVID-19, SMEs ’ addiction on bank finance and the inability to raise other sources of funds at shortstop notice can turn a liquid deficit into a solvency trouble ”, according to the IMF .

Struggling yesterday, struggling today

Across Europe, even before the outbreak of the pandemic, accessing finance was more unmanageable for SMEs than for large companies : more SMEs faced obstacles, were discouraged from applying for loans and received rejections .
In the UK, for example, more than 50 % of SMEs apply to entirely one lend provider because of the “ harass ” with the lotion journey .
“ SMEs ’ needs are diversified. They ’ ra struggling now and they will have to struggle post-COVID-19. A one–size–fits–all scheme may not work ”, Tiberiu Moisa,   Deputy CEO, Banca Transilvania ( BT ) said during the school term dedicated to SME Banking at FintechOS Annual Summit. BT has embarked on a journey to serve SMEs as a strategic segment for the bank .
“ Beyond consolation and user know, SMEs require from us : an inclusive mentality, agility & speed, support ( and empathy ) in service, and access to loans ”, Moisa added .
Moisa thinks technology saved many “ but this was just the begin of the new travel ” .
“ If we build and maintain an inclusive mentality – which is founded on the estimate that we  –, then our chances of meeting customer needs and building a customer-centric organization are so much stronger”, he said.

Three key areas

Is building an inclusive mentality enough to become an SME-friendly bank ?
Cătălin Dediu, VP Product Management Director at FintechOS, cited the “ fuss ” mentioned earlier during the consider, pointing out that digital leaders are focusing their transformation efforts on three winder areas :
1. time to Apply – cutting it down to 5 minutes
2. time to Yes – reducing it from 20 days to 10 minutes

3. time to Cash – slashing it to 24 hours
“ As a segment, SMEs credibly have the most change needs, and they ’ re endlessly evolving. But access to finance seems to be their biggest trouble. They are underserved : the average time-to-yes is 3 to 5 weeks. The average time-to-cash is 3 months. But a big customer base with growing needs means untapped revenues ”, Dediu observes, pointing at the huge electric potential that bankers can unlock. “ There is an opportunity to embed themselves at the centre of the SME ecosystem ”, he says .

Besides access to finance, SMEs ’ need for personalisation and customisation is credibly the most press. How can this motivation be served ?

  • “ In regulate to achieve personalisation, banks need to use the right technology to unleash data ” .
  • then comes the might of automation, which can improve the customer have while lowering costs .
  • “ Banks should aim to redesign back-end processes to eliminate manual remark and enable real-time decision-making ”, Dediu of FintechOS concluded .

KBank story: How future-fit SME Banking looks like

Thailand-based Kasikornbank ( KBank ) was established on 8 June 1945, at the end of World War II. From the very beginning, the bank placed vehemence on fiscal services for farmers, who made up the majority of the Thai population. “ such inaugural kept the economy rolling despite hard times during the War ”, KBank writes on its web site .
In 2020, amid unmanageable times for little businesses and entrepreneurs, hit by the COVID-19 crisis, KBank came up with a like first step, expected to save 41,000 employees. In early May, the Asian deposit launched a 1-billion-baht lend outline, offering interest-free borrowing for the first base year to modest and medium-sized enterprises ( SMEs ) with up to 200 employees. All as a means to keep 41,000 workers on payroll during the pandemic. The Baht is the basic monetary unit of Thailand and equals 0.034 United States Dollar .
“ The bank will besides provide a monthly grant of 8,000 baht for three months to SME employees taking contribution in the scheme ( … ). The scheme waives all fees, requires no collateral and offers a debt moratorium for one year ”, KBank ’ sulfur representatives stated in a wardrobe statement last spring .

Chat Luangarpa, Executive Vice President at KBank was a speaker during the consider on SME Banking in November. He revealed his bank ’ s scheme towards this segment, which goes beyond offering entree to finance, SMEs ’ main concern .
“ SMEs are by and large estimable at what they do, but they normally struggle in terms of servicing themselves ”, Luangarpa noticed. “ We ran some studies and we found out that customers are looking for person to help them expand their business, to be efficient in what they do, to optimize their cash-flow, connect to other businesses – and more. ”
How is KBank tackling this ? “ We are serving them by offering a draw of B2B subscription-based solutions and on-line services. We are besides partnering with technical school companies to transform themselves in a digital earth and elaborate overseas .

More than that, to better serve its customers, Chat Luangarpa said that KBank built a course of study, KSME Digibiz, where the bank is trying to embed its services into the B2B ecosystem. “ We work with partners to offer this military service as a seamlessly integrated technical school and banking solution to help SMEs come onboard and improve their experience ”.

What does KBank get in restitution ? “ We get to see a bunch more information about their clientele and real-time transactions. In the future, we will use this datum to customize our services ” .
KBank ’ s SME business division in the beginning half of 2020 reported outstanding loans of Bt538.4 billion, up 11.3 per penny year on year. New SME lend was registered at Bt143.4 billion, or an increase of 13.9 per cent, the savings bank reported .
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