Including beyond banking (non-financial) services into SME Banking offer becomes a competitive advantage and the thing that distinguishes banks in the eye of the entrepreneurs, as traditional banking operations like access to accounts, and transactions in local and foreign currencies are digitalized by 80% of banks in the CEE region, those functions became a must-have and available for SMEs in every bank.
Personalized offers, embedded finance, contextual finance (finance offered in the context of the customer’s business, at the exact moment when the customer might need it) – all these trends we’re discussing all over – are possible only in the ecosystems, and with interoperable data.
Leading banks in the CEE start building ecosystems for their SME customers. We see examples of implementation of e-invoicing, online accounting, e-commerce platforms, and payment gates in ING Poland, mBank (Poland), Santander Bank Polska (Poland), OTP Bank (Hungary), Budapest Bank (Hungary), which are integrated or partially integrated with digital transactional banking channels.
To attract new customers and retain existing ones, building an SME banking ecosystem requires creating a network of financial and non-financial services that cater specifically to the needs of SMEs.
On March 22, together with Comarch, we conducted a Roundtable on how to build effective ecosystems.
Here are some steps that can help build an effective SME banking ecosystem, which we can call an SME Ecosystem playbook or a guideline:
- Of course, everything starts with defining the vision and mission, identification of targeted segments, and value proposition. This is very much about understanding SMEs and their business needs. It sounds banal, but being an SME customer myself, I can ascertain that SME bankers understand SMEs very purely. We discussed the topic of the Understanding gap with John Mark Williams (The Institute of Leadership and Management, UK). You can drive deeper into that here.
- Develop an Ecosystem business model: identify revenue streams, cost structure, and key partnerships.
- Partnerships: The success of an SME ecosystem depends on partnerships with other banks, fintechs, technology, and service providers. Building a network of partners is essential for creating a comprehensive SME ecosystem.
- Leverage technology: Technology plays a critical role in building an SME ecosystem. This includes developing digital banking platforms, mobile apps, and other digital solutions that cater to the unique needs of SMEs. But before that – IT infrastructure. To create an Ecosystem model a bank should move to composable applications, where it is possible to compose new digital capabilities from existing applications using APIs, rather than building them from scratch every time. Maciej Salata (Comarch) talked about that during the latest joint Roundtable in every detail. – Modern Composable/Microservices IT infrastructure is a prerequisite to building ecosystems and the capability to integrate with many partners. And we see banks are moving towards that IT architecture model. Michal Kurowski shared their experience on that in the Raiffeisen group (you can watch here).
- Provide non-financial services: SMEs need more than just financial services to grow and succeed. Offering non-financial services such as e-invoicing, online accounting, collection, networking, and business advisory services can help SMEs thrive. Just because these are not the core business functions of SMEs, helping them to automate them and let them focus on their business activities will be a win-win situation for the bank and SME customers. It was a statistic that SMEs in Europe spend 1 day a week on non-core activities. Imagine how important is the automation of such services for them. Banks can become here great and trusted providers of such services as SMEs can’t afford to do that on their own (because of time and money).
- Personalization of the offer: becomes possible in the ecosystem due to data aggregation from multi-bank and non-bank data sources (ERP systems, e-shops, etc.). It also enables effective cross-sell, and retention actions.
- Proactive sales and real-time offers in the context of customers’ business and life: data, aggregated in the ecosystem, with the use of predictive analytics will enable offering finance to SMEs at the right moment, before customers fall into a liquidity gap, for example.
- Focus on customer experience: Customer experience is critical for the success of an SME ecosystem. This includes, apart from personalized offers, a fast smooth, and efficient customer journey on one platform.
To learn more, watch the video recording:
