by Anders la Cour, Co-founder and Chief Executive Officer, Banking Circle.
For many start-ups, especially SMEs, getting the business up and running is the easy part. They have a great idea and they know how to bring it to market. But the issue keeping new and small business owners up at night is banking. With no two SMEs alike, banks – be they incumbent or challenger – are not always able to provide small and medium-sized businesses with the flexible, fast-paced solutions they need.
Depending on the size, structure, ownership and history of the business, and the bank they speak to, the banking options available to SMEs vary dramatically – yet rarely suit the business imperative. Application and set-up takes too long, costs are out of reach and credit repayments are inflexible.
As a business passionate about increasing financial inclusion for SMEs, Banking Circle commissioned MagnaCarta Communications to carry out research into these issues. The first report, Financial Inclusion for Europe’s SMEs: Building a Circle of Trust, was published in June 2019.
We are now publishing a second report, Circle of Trust or Out of The Loop?, which will be launched at Sibos 2019. This includes insights from some of the people working in the midst of the challenges and the solutions hitting the market today. Speaking to these experts gave us first-hand insights and experiences, uncovering where changes are happening, where opportunities exist and where barriers are beginning to come down to improve SME financial inclusion.
Thankfully, providers are finally beginning to realise the potential held by the SME banking market.
Broadening SME banking horizons
“SMEs are still not top of the agenda for most financial services providers, but many are waking up to the benefits,” said Valentina Kristensen, director of growth and communications at OakNorth Bank. “They are realising that if they get an SME on board, they will be loyal and bring multiple cross-selling opportunities.”
As the Banking Circle report shows, bringing about real change and better financial inclusion for SMEs requires market participants to work together and develop joint solutions, collaborating to build bridges between individual innovations already in the market.
“We are creating a new ecosystem of financial services providers, in partnership with other providers such as Banking Circle, to establish a new era of financial services which will better service customers and SMEs in the banking space,” Roger Vincent, general manager (UK&I) and CIO of Trade Ledger, commented. “If we better serve the banking space through the incumbents, then the SMEs will benefit greatly as they can access the services they want.”
However, as the latest Banking Circle report shows, the progress and potential achievements will remain limited until further collaboration, communication and joined-up thinking becomes commonplace within the financial services industry.
As with any ecosystem, it must be perfectly balanced in order to function effectively. Only with all types of providers working together in collaboration, not competition, will the banking ecosystem be able to bring financial inclusion to its peak.
Click here to download the report ‘Financial Inclusion for Europe’s SMEs: Building a Circle of Trust’.