LATEST THINKING

Unlocking £8.5 billion in new revenue from SME customers

Digital value-add offerings can be the key to such potential.

Overview

Small-Medium Enterprises (SMEs) make up 99.9 percent of all businesses in the United Kingdom, yet banks are failing to address the opportunity that this diverse segment presents. The current focus on high quality basic banking services at low cost will no longer fit the needs of SME customers, and banks run the risk of losing relevance and revenues to more digitally savvy providers.

An Accenture commissioned survey of 1,000 SMEs across all sectors has revealed more than 60 percent of businesses would use their bank if value-added services were offered. The potential reward for banks that better engage SMEs is £8.5 billion in new revenue streams by 2020.

But they must move fast, as the threat of competition, including from outside the financial services industry, is strong. The good news is banks are well-placed to take advantage of the perception gap between what SMEs want and what banks can provide. By changing the conversations from cost to value and shifting to a "business partner" outlook, they can fill the opportunity.

"An Accenture commissioned survey of 1,000 SMEs across all sectors has revealed more than 60 percent of businesses would use their bank if value-added services were offered. The potential reward for banks that better engage SMEs is £8.5 billion in new revenue streams by 2020."

Key Findings

SMEs are prepared to pay for added-value products, the challenge is shifting perspective and positioning the bank as the obvious provider.

1.6 billion potential annual revenue opportunity for banks from value added services.

Over 20% of SMEs would be happy to pay an additional monthly fee for value-added services.

60% of SMEs are open to deeper engagement with their bank.

28% of SMEs would be happier if their bank offered more complex services on demand.

1/3 of SMEs are using, or have expressed an interest in a whole range of added-value services.

70% of SMEs don't consider their bank when looking for services to help them run their business better.

28% of SMEs would be interested in fully automated banking processes.

However, SMEs are far from being a homogeneous bloc. They range enormously in scale and ambition, and Banks seeking to do more in this sector need to create a much more detailed picture of the market and its participants.

RECOMMENDATIONS

SMEs represent a major opportunity for banks, but change is needed in order to develop the value-added proposition. The imperative is to understand the scope of SME business (not just financial) needs and focus on how to meet them. As part of this process, we believe banks should follow 3 steps:

1. Change the conversation

Banks need to change the nature of the conversation they have with their SME customers—it’s not just about being a financial provider any more.
2. Consider Ecosystem Approach

To meet the hugely varied needs of SMEs across the country, Banks should consider an ecosystem approach, partnering with FinTechs where possible, as well as other established technology providers of services and products that can help change today’s Banks into the SME partners of the future.
3. Take Multi-brand Strategy

New approaches often demand new structures. Banks should consider the opportunities offered by a multi-brand strategy as they seek to position themselves as relevant providers of services to SMEs across the spectrum.