How to win SMEs in the fintech era?

Banks don’t want to credit SMEs. But fintechs do, and they’re taking over. What’s next? There’s a way.

The needs of SMEs are vast. They include accounting, legal help, cost optimization, financing, marketing, and a number of other services.

Entrepreneurs eventually find all of these – not in a bank though. That’s not so good, but here’s how you can turn the tide:

You become more available

In 2020 mobile banking is a must. According to the App Annie’s “State of mobile 2020” report, mobile-oriented companies have 825% higher IPO valuation than companies that are not focused on mobile.

Figure 1 Page access via mobile devices (Aumcore)

Keep in mind responsive web design just pays off. Write once, run everywhere: on desktop, tablet and mobile. In case of any compliance adjustment, you’ll only have to change one system, not three. Introducing new features would be easier as well, and it guarantees quick time-to-market.

You become more agile

Internet giants are known for their agility. To compete with them, banks need to react fast to what’s going on in the market. Start small, fail fast. Deploy minimum loveable (not viable) product as fast as possible to gather feedback. Then, decide whether to develop it further.

Do not plan big releases containing major changes. Better release smaller pieces frequently to lower the cost of potential failure.

Also, because customers are always complaining about changes in a system they use, make upgrades step by step instead of replacing the whole platform in one swing. You can start with upgrading search feature, changing operations history module or adding new product application form.

Figure 2 Agile methodology

You keep your platform open

Say you bought a coffee vending machine to accommodate your customers. What if they want tea now? The machine becomes useless. In an open solution such as… a kettle, you wouldn’t have any problem. The only thing you’d do is change coffee beans for tea bags.

So, don’t say no to external solutions. A lot of valuable projects like blockchain settlement systems, OCRs, mobile payments hubs or social scoring engines have come to prominence recently. Connect them through open APIs to deliver new features for SMEs. It is the most efficient way to develop a banking solution. Platform thinking helps to keep your options open.

Using SWIFT to send transfers? If blockchain ever becomes a standard, you could easily replace the SWIFT network by Ripple.

You take a holistic approach

The average smartphone user spends 87% of their phone time on 5 apps. Why not make your banking app one of them?

Transform your banking platform to a one-stop-shop for SMEs. How? Integrate with external cloud solutions to provide ERPs, CRMs, e-commerce, analytics, payment hubs, FXs, legal advisory and marketing.

SMEs will be more keen to use solutions that were picked by the bank and kept under one roof. It guarantees them appropriate quality, and in case of any problem they can expect to get help from your bank.

You capitalize on external data

There has never been a greater opportunity to use data on such a scale as now. Apart from the internal data warehouse, there is a huge potential in external sources like history from other banks, external warehouses and social media.

Run an analysis of internal sources like loans, deposits, orders, trade finance, cheques, operation history and balances, combined with an external ERP. This will let you predict customer liquidity and help them keep it by offering suitable products.

Fintechs are considered a dangerous player on the market, but banks are still able to win the SME segment. That’s because banks have unique databases. By combining these databases with external data sources analysis, you can obtain powerful results and drastically increase the quality of your services.

 

Piotr Filipiak

Business Solutions Consultant, Comarch