91% of UK SMBs Trust Their FIs But Still Face Banking Challenges

Despite the pandemic’s impacts, small and medium-sized businesses (SMBs) continued to grow in the last year, with 32% more SMBs formed in 2020 than in 2019, according to an SMB-focused study on Next-Gen Commercial Banking.

Read the report: Next-Gen Commercial Banking: Small Business Digital Banking Needs Best Served With ‘a la carte’ Services Powered by APIs

But like many other companies, these businesses were hit particularly hard and have had to rapidly adopt digital payment and banking solutions to meet their shifting needs.

This has created an opportunity for banks around the world looking to appeal to the growing number of businesses eyeing digital banking transformation success and turning to virtual channels to conduct more of their business dealings.

According to the PYMNTS report which examines how financial institutions (FIs) can meet the unique demands of SMBs, FIs hoping to engage and retain these SMB customers’ loyalty must be open to offering “a la carte” products and services for SMB clients.

One of the top priorities is enabling faster and more transparent business-to-business (B2B) payment experiences, not to mention the need for speedy virtual connections for businesses shifting to remote working models.

As the report stated: “Solving SMBs’ historic payment frictions while meeting their changing needs in a digital-first world should be a priority for today’s commercial FIs.”

To meet these needs, banks can leverage application programming interface (API) technology and open infrastructure to connect digital payment services to other B2B tools.

Read Weir’s interview: APIs Help Banks Meet Businesses' Growing Work-From-Home Demands

Clayton Weir, co-founder and CEO of commercial banking services provider FISPAN, told PYMNTS in an interview that these technologies are proving critical to managing online financial processes and relationships, and FIs aiming to keep their corporate clients engaged will need to examine how APIs can help as businesses’ needs continue to evolve.

See also: APIs Help FIs Consumerize the Business Banking Experience

An example of a bank taking steps to solve these frictions is United Kingdom-based FI HSBC. According to recent statements from CEO of Global Commercial Banking Barry O’Byrne, the bank plans to invest $2 billion in digital transformation efforts in the next five years in hopes of becoming the “bank of the future.”

These projects are aimed at streamlining financial experiences for businesses, an increasing necessity as 96% of HSBC’s commercial banking payments are conducted online, O’Byrne said, per the PYMNTS report.

FIs must also take into consideration the needs of members of the millennial generation and younger generations, who are poised to become the majority of B2B decision-makers over the next few years, the report noted.

This new generation of business owners are more likely to switch FIs for faster or more convenient online services, making it crucial for banks to not only create cutting-edge digital experiences to maintain engagement, but bolster their customer service approaches to maintain millennial business owners’ trust and attention.

For FIs in the U.K. they seem to be doing a great job at retaining SMB customers’ engagement as a recent study showed that 91% of U.K. SMBs say they trust their current FIs to handle their business banking needs efficiently.

However, 1 in 9 SMBs reported a variety of challenges with their banking experiences which could damage these relationships if their FIs are unwilling or unable to solve them.

The report also revealed that 37% of SMBs that have submitted complaints to their FIs did not receive satisfactory responses — a lapse that could provide an opportunity for digitally optimized competitors to enter the space.

Keeping banking experiences seamless and personalized should therefore be of the highest importance for FIs moving forward.