Small and medium-sized enterprises (SMEs) have always struggled to meet their financial needs quickly, as traditional financial institutions (FIs) often do not serve these businesses. The continued push towards digitalization in the business and financial worlds means that FinTechs and digitally-driven banking players are also more often targeting SMEs as clients, forcing traditional FIs to defend their SME clients.

Traditional FIs need to understand precisely how SMEs operate if they are to meet their needs. While larger or more established entities often have strong accounting and finance teams, many small business owners manage their banking needs on their own, said Kelly Burdette, senior vice president of digital and products at Bank Independent.

Burdette said in an interview with PYMNTS that many of these owners are often busy meeting their daily business needs during the work day. This means that enabling them to “self-serve” – to access banking solutions when it suits them, whatever the time – is crucial to capture their attention.

“We’ve done a lot of things on the consumer side, where we’ve tried to give them all the self-service options, whether it’s through a device, a mobile [device or] tablet… all these different digital channels, ”he said. “For small businesses we’ve fallen behind, so I think there are real opportunities. [But] I think that created some challenge, because how do you get past that eight to five mindset when it comes to supporting small businesses as a financial industry? I think that’s why the FinTech world is starting to fill in some of the gaps and loopholes that traditional banking has created.

Closing this service gap is crucial for traditional financial institutions looking to retain and retain today’s SMEs, especially as more businesses turn to the use of digital channels. to interact with their customers and manage their own business and payment needs.

Personalize the banking experience of SMEs

Meeting the needs of SMEs and emerging companies requires an increasingly digital touch. Burdette explained that the financial needs of SMEs tend to be more focused and immediate, and that they generally don’t need to access the same variety of payment or banking solutions as larger companies with more coins. mobile. Providing small businesses with the flexibility to choose their pay-per-view banking features can allow them to use the tools or services they need without spending more time trying to figure out or manage solutions that don’t benefit their businesses. .

“Most emerging companies [have] the type of entrepreneurial mindset, where they haven’t holistically moved to a bigger platform, like QuickBooks or something like that, ”he said. “So they can just manage their accounts in a more personal way. They just send invoices, collect payments, move, transfer funds – [and] maybe every now and then they need to send a thread [payment], make a [automated clearing house] payment or [send] a receipt. So [by] allowing them that ability à la carte, where they simply select it, they could do it whenever they want.

Supporting this flexible approach will force traditional banks to examine their current infrastructures, with a focus on technologies such as application programming interfaces (APIs) that can enable seamless and secure connections between platforms. disparate forms or banking offers. These technologies can help banks create experiences that allow businesses to access the tools they need without switching between systems, Burdette explained.

“How to build an open infrastructure? ” He asked. “The buzzword right now is open banking, so how do we create an open infrastructure so that whatever tool is used by the small business or [that an] that emerging companies use to run their business, how can we fit into that without sacrificing all the other tools behind it? “

Cultivating this connectivity is essential for banks wishing to retain their SME customers, but traditional FIs must also make sure to keep a close eye on how the needs of SME banking customers may continue to evolve in the coming years.

Prepare for next-generation B2B payments

FIs need to closely monitor changing business banking and payment needs and preferences, especially as businesses and consumers expect faster payment experiences. Still, it’s important for banks to realize that SMEs don’t spend as much time as financial players exploring new and upcoming payment options or features, Burdette explained. This means that FIs that quickly offer emerging payment solutions such as the RTP network offered by The Clearing House (TCH) or the FedNow system of the Federal Reserve could gain a competitive advantage.

“There will be an incredible short-term opportunity for us to create new payment mechanisms, payment tools that will get on these rails, especially from a B2B perspective. [perspective] and how these [rails] will evolve, ”he said. “So this is where innovation, creativity in our industry must gain momentum. [up. We also must figure out] how we are going to partner with FinTech and not let FinTech overtake, but [create a] a true partnership between the tech industry and the banking industry… to help us, the industry and small businesses, manage their business better, more securely and faster.

Preparing for this next generation of digital payments is one way existing financial institutions can meet or exceed the changing banking needs of today’s more digitally-focused SMEs. It is essential to ensure that they are ready to support the flexible banking solutions that these companies expect.