Author: Beatrix Percze
ApPello had the pleasure to take part at the Efma SME Banking Summit, Vienna, 13-14. June, 2019. The event focused on the SME segment, since the recognition, that small and medium enterprises play an important role in economic development, still growing. With globalization and digitalization the segment has more complex financial needs than ever before.
Despite of these, experts from various key players of the banking industry, Erste Bank, Sberbank, OTP, Revolut, Backbase, ING DiBa and Raiffeisen agreed that SME-s are being underserved. Reasons include the heterogeneity of the segment, since SME-s can vary widely from unbanked micros facing daily financial difficulties, to stable, growing mediums who expect nothing less than premium customer experience. Aim of the two days were to offer Banks and financial institutes a discussion platform to better understand their SME customers and to create innovative products and services to meet their requirements. In the end, experts agreed that challenges that SMEs face can be grouped in 3 main areas. Let’s see them and the possible solutions one by one:
– Need for maintaining day-to day liquidity, managing everyday finances, payments, invoicing, compliant with regulations and fulfilling reporting tasks. This can be a huge challenge for those micros and small enterprises where deeper financial and regulatory knowledge is missing or the human resource is needed for the core activity. To gain market share in the segment, it is crutial to offer easy-to-use customer portals and develop services that are often non-banking in kind, but essential for SME-s when choosing a financial partner.
– SME-s demonstrate higher credit risk, than large corporate, but need more complex credit products than standardizable retail clients. It is difficult for them to get traditional bank loan, so they need to survive the first critical years without traditional banking support. In this risk-averse segment this can create a vicious circle of stopping growth or worse, not overcoming financial difficulties at all, this can cause a reduction of a key segment in a healthy economy. Coming up with new, suitable product ideas, or at least tailor-made the existing loan products for the SME-s needs, and improving consultancy are therefore crucial steps in order to win market share while contributing to the „engine of economy’s growth. Customer-friendly portal solutions can free relationship managers from administrative tasks, making them available for consulting, while flexible platform solutions enable banks to „learn on the go”, customize their portfolio and adapt new product ideas easily.
– Using the advantages of globalization, value chains are becoming more fragmented and longer than before. This increase in trading volume requires modern trade finance solutions accessible to SME-s as well.
It is clear that banks and financial institutions should focus more on this segment and offer solutions tailor-made to the challenges SMEs are facing. FinTechs have also realized the unrevealed potential of the segment, partnership with them can grant both the access to a broad customer base and delivering the right solutions that can support this key segment.
For ApPello, besides the useful thought and the opportunity to introduce how we can contribute to Banks operations to serve SMEs at a higher level, it was a highlight that we were chosen to be the best exhibitor of the event. We are really proud of this, thank you, Efma!