According to Strands, a leading business management technology provider, the study of more than two hundred SMEs (small and medium-sized enterprises) and banks catering to more than 1.3 million SMEs reveals the existing and future financial requirements of SMEs and how banks are able to meet those needs.

According to the research, the biggest challenge faced by SMEs is ‘economic uncertainty’. Hence, it comes as no surprise that as far as banking is concerned; SMEs are on the lookout for banks that can support them in managing and growing their business during rough times.

Further, SMEs are quite confident about their banks being able to offer them sane advice. About 46 percent of these SMEs believe that their bank has a good understanding of their financial requirements. The problem lies in the fact that there isn’t any intelligence being applied to the services offered, particularly digital services.

Increased digital communication is perhaps the most efficient way of retaining and attracting small and medium-sized enterprises. About 84 percent of the SMEs say that would prefer the digital delivery of business growth and financial planning advice.

While there has been a digitization of transactional services by banks (for attracting/retaining customers), there is still little progress in the area of financial management, the area most valued by SMEs. And the consequence is that almost 70 percent of these SMEs have started to consider their banks as utility service providers instead of business partners. Further, nearly 83 percent of the banks agree to this scenario. 

SMEs are expanding in a disillusioned fashion given the key transactional serviced being offered to them. Nearly 40 percent of these businesses state ‘lack of customization’ as a key reason for abandoning their existing provider. It seems that banks are in agreement with the SMEs, though only to a certain extent.

SMEs are operating in an environment of extreme economic upheaval and there has been a gradual weakening of the relationship between these SMEs and banks. Small and medium businesses are craving personalized banking and financial advice offered in a digital format so that they can manage and expand their operations in a time when there high amounts of economic uncertainty.

The incumbents are unable to meet the stated requirements and are quickly being tagged as ‘utilities’, that is, providers of simple transactional services.