How can fintech support the SME sector beyond Financial Inclusion Week?

By Yanki Onen, CEO and founder, wamo

As I reflect on the recent Financial Inclusion Week, one unresolved issue in particular stood out again this year: SME banking. While the fintech revolution has ushered in an era of convenience for consumer banking, it’s still yet to really crack that SME market. In fact, many argue that SMEs have taken the biggest hit from the shift to digital banking over the years.

SMEs require a higher level of a bank’s attention than consumers. Attention which has dwindled as banks shift from the days of human-led support and towards ever-automated systems and frustrating chatbots and hold music. Forced to navigate a painful system, too often SMEs give up on opening a business bank account altogether, missing out on a raft of potential benefits.

In a world where the human touch is becoming rarer and rarer, I believe that a human-led approach to SME banking is crucial. This is a huge problem that the fintech sector has been working to solve. However, there’s a long way to go.

SME banking: strict, distant and painful

When you consider the processes that SMEs must follow to open a business account, it’s no surprise that the shift to digital banking has been challenging. Opening a business account in the UK or EU can stretch to up to six months, require multiple interviews and an excruciating amount of documentation. Simply put, SMEs often don’t have that time to spare, and founders I regularly speak to find it incredibly frustrating. What’s more, KYC and reference processes often drag for business accounts, and the ‘one-size-fits-all’ approach built into legacy banking technology (and some fintech technology) means that many founders, particularly those from non-traditional backgrounds, get rejected without much of a clear explanation.

SME banking is even more of a minefield for those outside of the UK and Europe that want to enter these markets, due to tougher regulations and additional documentation requirements. In many cases, it’s an ordeal that can test the patience and commitment of even the most resilient entrepreneurs. So, you can imagine how navigating this already painful process plays out when there is no real human support or personalised guidance.

A human-led approach

I could talk all day about the well-documented issues that founders, of all backgrounds and types, face when it comes to banking, but I believe there are some tangible steps we can take to make this fairer for all. Central here is a return to human-led banking, which is something that the fintech sector is uniquely positioned to lead the charge on. I realise it’s become somewhat of a cliché to say, but it remains true – one of fintech’s key strengths over more traditional players is an ability to be more agile and flexible, critical for SME banking in particular.

So what does this actually mean in practice? Breaking it down into a few parts, first let’s cover the opening of an account.

As I’ve touched on already, one of the primary barriers to SME growth is the time it takes to open a business account. Traditional banks can take months to complete the account opening process, causing significant delays in critical financial operations. Not only does this impact SMEs themselves directly, but also their suppliers and contractors. A human led approach here is critical in my opinion. If the first interaction you have with a business is poor, waiting six months to be able to use their product for example, what tone does that set about how important you are to them as a customer and the level of support you can expect to receive from them? Having human contact at the start of a banking relationship should not only significantly reduce waiting times, but also set the tone for the relationship between an SME and its banking provider.

Secondly, we’ll take a look at customer support.

Many digital banks provide distant and automated customer support and neglect human interaction and personalised guidance. While consumers might often face similar challenges with banking, SME banking issues are often much more complex and less likely to be solved in the same manner. Truly tailored solutions here are key, as well as empathy and personal experience dealing with similar issues. Again, we see why the human touch here is paramount.

Finally, a note on expansion.

Successful SMEs grow. They expand. They venture out into new markets. It doesn’t always work out of course, but the reason for that should never be payments or banking related. Traditional business banking accounts often lack that flexibility that fast-moving SMEs really require. Businesses want to do banking like the locals in their market, they want to be able to manage their finances effectively across markets and, for example, operate with different IBANs in different regions. They want to get guidance from other people who have real experience helping businesses in different markets, they want local experts.

The Road Ahead

As Financial Inclusion Week comes to a close, it’s evident that there is still work to be done in the SME banking sector – as much from within the fintech sector as from outside. Put simply, this audience is often not a core focus segment for some of the key players. That of course is absolutely fine, but it shouldn’t be tolerated by SMEs and it’s important that they know there are solutions out there that can work better for them. Solutions that don’t make them feel marginalised or frustrated with a clear lack of support.

The fintech sector should really be leading the way here, and personally I believe that it is. But there’s so much more to be done and for me, that starts with a back to basics approach that majors on actual human interaction with experts.

Overall, I know I’ve painted a picture here of a fractured market with challenges that fintech hasn’t yet fully solved. But the honest truth is that I think the future of SME banking has never looked brighter, and it’s up to fintechs to realise that. As always, Financial Inclusion Week serves as an important reminder to the fintech community to start challenging ourselves to think of solutions that work for everyone, not just generalised use-cases.