SMBs need the support of banks more than ever.
Record interest rates, growing inflation and the expectation of a protracted recession are developing headwinds. SMBs (small and medium-sized businesses) bear a particular burden, as they can lack the financial cushions larger, more established organisations already have in place.
One-in-three UK small businesses fear a collapse if unable to access financial aid, such as a loan or credit options, by the end of 2022. Small businesses are critical to the UK economy, making up 60% of total UK employment, so ensuring they get the support they need is crucial.
Standing in the way of that is a common misconception among banks that SMBs need lots of attention while driving less revenue for them than enterprise customers. To change that, innovations within the banking system are needed which make supporting small businesses less time intensive.
Streamlining the support process
At the heart of all banking processes— especially customer-facing interactions — are agreements. They’re fundamental to the customer moments that matter. In 2022, many organisations turned to digital agreements and eSignatures to accelerate the customer experience.
Digital agreement technology drastically improved the most common problems areas. The result was faster turnaround (by an average of 50%), less time spent on documents (by 30%), better customer experience and less risk of errors.
Through digitising agreements, signing contracts is secure and agile. As economic volatility and political instability have been further normalised this year, speedier support has been the lifebuoy for many small businesses and their banking providers who are having to navigate the rapidly changing environment. In today’s digital world, long wait times can mean lost business and a threat to survival.
One organisation that managed these risks well is Funding Circle, the UK’s largest loan platform for SMBs, whose technology enables small businesses to apply for financing in under 10 minutes, and loans in seconds. This helps lenders eliminate the bottleneck situations, which are commonplace in SMB financing, with digitised workflows that provide a streamlined application for financial aid. Reducing points of friction in financial services is vital for banks helping SMBs weather this economic storm.
Funding Circle is an example of a forward-thinking organisation using available technology to minimise risk and empower its offering. It engages with customers, reacting to their requests, and removing disruptive processing times that reinforce the value of the service it provides.
Digitalised financial services, such as those provisioned by Funding Circle, also enable continuous and easier access to support for SMBs than physically visiting the bank would provide. For example, if a financial institution uses eSignature technologies, agreements can be signed faster and from anywhere in the world – and they’re more secure than traditional paper-based agreements.
Esignatures also verify the identity of customers; imperative with the increase of identity fraud targeting financial services since the pandemic. Customers can verify their identity during their initial interaction, further expediting the process of receiving vital funds and ongoing support.
Better banking relationships
With small teams, SMBs will typically rely on financial services providers, including banks, more than larger organisations for advice alongside any monetary support. When provisioned successfully, it can build trust and open up more opportunities to upsell to SMBs, for example through legal and regulatory support functions.
However, that trust can be hard to maintain, so it’s important to have processes in place that will make the onboarding and client relationship strong and prosperous for both parties.
The shift to digital banking hasn’t been smooth. Consumer trust in traditional banking and finance is failing rapidly. Caused in part by the rapid shift to digital amid the COVID-19 pandemic, it has dipped to a low of 29%.
But for financial services providers, challenging times also represent opportunity. According to recent research, 88% of customers believe trust becomes more important in times of change. It’s critical for banks to strike while the iron is hot, and work with SMBs to build a solid foundation of trust that will help them to thrive during troubling economic times.
Often bearing full financial responsibility, small business leaders should not feel alone when navigating challenges. As it’s the peace of mind that if economic pressures come crashing down, timely responses to change will follow. Thus cultivating customers that stick around for your services.
Knowing that your bank has your back when quick-fire funding will keep you afloat, will be a superpower for small businesses, so financial services providers must have the infrastructure in place to help them quickly and effectively navigate what lies ahead.