This IDC Perspective looks at the SME segment and how traditional SME banks should take the growing competition and the change brought about by open banking, artificial intelligence, and a desire for a trusted advisor relationship to dust off their aging SME value propositions. Neobanks and fintechs are already zooming in on this long-neglected customer segment, which is still held back by a lack of funding, vanilla cash management offerings, and poor channel experiences.
"SME lending has been neglected by large incumbent banks for too long, and access to credit remains one of the biggest challenges for SMEs. Fortunately, innovation is injected in the segment by neobanks and fintechs that have identified a massive opportunity to compete on the back of SME frustration with their traditional banking partners. Technology is providing a level playing field for all that embrace the principles of a new, open, and data-driven SME banking proposition," said Tom Zink, research director, IDC Financial Insights. "How far COVID-19 will accelerate this transformation, given massive public aid programs to keep SMEs liquid, or benefit overly risk-averse incumbents that have underserved SMEs for decades remains to be seen."