What is it that SME owners really need and expect from an online banking solution?
With a $46 trillion annual spending power, small businesses (SMEs) are an indisputably attractive market segment for financial services. However, SMEs have historically been underserved by their banks, which keep offering them retail-oriented banking products.
This situation has led to generalized discontent among SMEs and seeded growth opportunities for Big Tech and financial technology companies. As these new market players expand their SME lending efforts by wielding their digital-native capabilities, traditional lenders are finding it harder to create a banking value proposition for small-businesses’ owners.
So how can banks create a compelling, new generation of SME propositions? It’s quite simple, really. Like any other company, financial institutions need to listen to their target audience and become trusted problem solvers.
Over the last few years, machine learning and artificial intelligence technology have created amazing tools and resources, putting robust solutions at our fingertips. Yet, there has been relatively little innovation in SME banking. Or at least, that's the impression many SME owners get.
What SME banking customers want in a BFM solution
Banks can and should play a bigger role in the lives of their SME banking customers. By deploying an AI-driven business financial management (BFM) solution, lenders get to know their customers better and bring them the personalized banking experience that they crave.
Still, there are times when banks don’t have the expertise or resources to build such a system in-house, no matter how committed they are to raising their SME-banking game. In such cases, collaborating with a FinTech partner and implementing a white-label solution is the way to go.
There’s a wide range of areas where financial institutions could help small businesses. But what is it that SME owners really need and expect from an online banking platform?
1. Advice and insights for growth
40% of the SME customers would consider switching banks due to lack of personalization
According to data from the U.S. Bureau of Labor Statistics, roughly 50% of small businesses fail within five years. A lack of financial literacy is a common problem in SMEs and is often cited as the main reason for their collapse.
By aggregating and processing raw data, an AI-powered business financial manager allows banks to understand, anticipate and solve the needs of SMEs. With the help of sophisticated predictive analytics models, BFM provides SME owners with personalized financial advice and next-best-action insights.
2. Stress-free planning tools
50% of SME owners want Tax Planning tools
Half of the small-businesses’ owners need help planning ahead. That’s why providing them with an interactive financial calendar that shows daily, monthly and yearly spending patterns makes a great deal of difference.
3. A complete overview of their finances
Around 80% of small businesses that fail, do so as a result of poor cash flow management. A proven way of empowering SMEs to become more efficient is offering them added-value, contextual, highly synchronized solutions with accounting and invoicing tools.
Strands’ BFM helps business customers to better forecast and manage their cash-flow by aggregating accounts and invoices into a single platform. Furthermore, Strands’ API Hub solution is a simple interface that leverages Open Banking to connect multiple external services securely in one place. It offers customers an overview of their finances and the ability to connect to third-party services.
To sum up
To thrive in the small-business ecosystem, banks need to work on improving their relationship with SME owners, become their trusted advisor, help them better manage their company and boost their business performance. And partnering with FinTech firms is a cost-efficient, flexible and proven way to achieve it.
Strands’ AI-driven BFM allows SMEs to manage their day-to-day activities with the confidence that comes from foresight and planning. One platform from which to:
- Synchronize all accounting and invoicing
- Create tax provisions
- Prepare for fluctuating cash flow
- Carry out their business, stress-free.
Artificial intelligence (AI) is definitely one of the biggest drivers for change in the financial services industry. From enabling a frictionless onboarding to preventing payment fraud, the uses of AI in banking are far-reaching.
If you are interested in finding out how Strands can help your bank, or if you would like to get a Free Demo of our AI-powered Financial Management solutions, please fill out this form and one of our Sales Reps will get back to you as soon as possible.