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Essential resources for banking executives:Enter ‘Banking Reinvented’

How to win over SME customers in today’s banking world

Stop thinking like a bank and start thinking like a technology company

by Backbase


Small and medium-sized enterprises (SMEs) are operating in a fragmented banking environment, and it simply isn’t serving them. On a day-to-day basis, SMEs are tapping into a wide range of apps and services to meet their financial needs. From banking and bookkeeping to payroll services, expense reconciliation to accounts payable and receivable, few SMEs have access to a single dashboard offering a comprehensive view into their financials – something that should be table stakes for today’s digitally savvy entrepreneurs.

Banks are uniquely poised to solve this problem. They should be the common thread tying all their SME customers’ financial needs together, but banks are starting from a deficit in regards to customer perception: According to 11:FS, only 18% of SMEs believe banks provide all the services necessary to effectively run their finances.

So, what’s a bank to do? Stop thinking like a bank and start thinking like a technology company.

A roadmap to outstanding SME customer service

One of the core tenets of serving the SME customer is identifying how to make their lives easier so that they can focus on growing their business. SMEs don’t want to have to open multiple browser tabs or apps to piece together the full picture of their financial functions, nor do they have the time to interface with several different customer service operators to answer all their questions.

Identify the services SME customers most often use and need. The first step in serving the customer is truly understanding their needs. Banks should conduct an audit of their SME customer base to not only understand which of the bank’s services they’re using, but also which third-party apps, technologies and other services they use to support their financial functions. This can help banks get a view into what their customers need, and whether they themselves have the technology in place to become the central hub for all those needs. Here are the four key steps banks must take to help reduce bottlenecks and inefficiencies for their SME customers:

  • Prioritize the right technology. The next step in becoming an SME’s holistic financial services partner is investing in the technology – apps, cloud services, data analytics, and so on – that will allow the bank to function as a one-stop-shop for customers. While this step may seem obvious, this is where many financial institutions veer off-course, layering new technology on top of legacy systems – which creates untenable complexity when trying to serve fast-moving SME customers. Instead, banks must seek solutions that help break down siloes between different banking departments, so that customers can have a singular experience no matter which element of the bank they’re interacting with. The right technology will also play well with the various third-party functions SME customers need to run their businesses.
  • Equip employees with the tools they need to deliver for SME customers. Technology alone cannot deliver the integrated experience SME customers need. Banks must evaluate whether they have the tools, technology and services in place that actually empower their employees to provide outstanding customer service. This means identifying where employees lack adequate visibility into their customers’ needs, as well as where interdepartmental siloes create roadblocks.
  • Continuously deploy improvements. Finally, once banks have all the pieces of the puzzle in place – knowing what their SME customers need, building the single platform to meet those needs, and ensuring employees are tapped into that platform as well – they must maintain that high level of service, and frictionlessly. This means staying ahead of the curve and making continuous upgrades to their platform without the customer even noticing, including supporting new third-party apps and integrations, offering new in-app services, and ensuring the user experience remains seamless. It is also critical to resolve any glitches in a timely manner to avoid damaging service interruptions.

Is the juice worth the squeeze?

Making any sort of massive technology investment as described above will be an expensive undertaking. However, there are two benefits for banks considering taking the leap.

First, offering a single-platform experience to SME customers will help banks compete for this lucrative business, in addition to retaining existing customers who might otherwise be inclined to work with other providers for their various financial needs. Moreover, as those SME customers grow their businesses, so do their banks.

The second benefit is that a heavy upfront investment pays off over time. Investing in the technology to build a single, integrated financial services platform should be viewed as a capital expense – one that may seem hefty when it’s made, but will ultimately reduce costs and help the bank become more nimble, flexible and innovative over time. It isn’t just a cost of doing business; it’s an investment in longevity.

It’s also important for banks to remember that they aren’t in this endeavor alone, making the task and investment not as daunting as they might initially believe. Managed services partners can help provide the tools and expertise necessary for banks to think like a BigTech company – without needing to completely shift their infrastructure and operations to actually become one.

Banks have, for the most part, successfully made the leap towards becoming digital-first businesses, offering apps, paperless account services, and some level of digital onboarding for new customers. But in order to truly thrive in a rapidly accelerating – and increasingly competitive – world, they must begin to view themselves as a technology provider, as well. This crucial shift in mindset is what will help them meet the ever-growing demands of the SME client.