Mambu and EY have collaborated to identify the five crucial factors that banks need to consider to ensure their small and medium enterprise (SME) lending offerings are accessible to SMEs. The report titled ‘Unlocking big growth in small businesses: How to drive SME lending transformation through product innovation’ explores the benefits of banks that address the unique challenges faced by SMEs.
The report identifies five building blocks
- Build deep customer relationships and understanding: SMEs are very different and require a deeper understanding of their circumstances to manage risks and identify opportunities.
- Have a clear proposition or choose a specific niche: SMEs’ needs vary across their lifecycle, so propositions must reflect this, and choosing customers to serve will drive the propositions created.
- Address SME needs holistically: SMEs are looking for partners, not just finance, so offering advice and an ecosystem of services will create deeper, more successful customer relationships.
- Create a market-leading and modern digital customer experience: Customers’ expectations are rising, and an easy and fast digital offering is the minimum requirement for success.
- Next-generation core platforms: Building lending services around a cloud-native and composable platform provides flexibility and longevity, allowing for easy combination of the best components in the market.
Banks also need to acknowledge SME pain points, as success rates for SME loan applications are 20% lower than for large enterprises.
William Dale, Regional Vice President APAC at Mambu, said: “Our report with EY highlights the importance of understanding the unmet challenges faced by SMEs to be able to develop products and offerings that will allow them to thrive.”
Alexandru Maruta, Senior Manager Technology Consulting at Ernst & Young AG, added: “SME lending is complicated if you only apply traditional approaches. Banks can now build their relationship with this client segment by leveraging the SME ecosystem enabled by new platform models like Mambu.”
The full report can be found, here.