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Iman Ghodosi, Managing Director Australia and New Zealand at Backbase

How to become the SME banking partner of choice

Saying that it’s been a challenging few years for Australia’s two-million-strong army of small and medium sized business owners is something of an understatement.

Hot on the heels of the Covid crisis, which forced thousands of enterprises to upend their traditional modi operandi and make an impromptu pivot to remote working, they’ve been forced to contend with staff shortages, supply chain disruption, soaring inflation and interest rate rises. Throw in uncertain economic conditions, both here in Australia and globally, and you’re looking at a recipe for grey hair and sleepless nights, for many decision makers.

In fact, there’s evidence to suggest many local enterprises are engaged in the fight of their lives, with the corporate insolvency rate expected to continue increasing into the 2025 financial year, as economic pressures intensify.

Businesses in the construction, accommodation and food services industries have been particularly hard hit to date, with the first group accounting for 28 percent of recent insolvency reports, according to corporate insolvency statistics published by ASIC in December 2023.

Emerging on the other side

But Australian businesses and business owners are a resourceful and resilient lot.  While times may be tough now, the majority will weather them and emerge on the other side in growth mode, when economic conditions begin to improve again, as they inevitably will.

And therein lies a golden opportunity, for financial services providers that can successfully address the particular requirements of this sector and deliver the responsive, value-adding services today’s SMEs want and need.

Delivering high quality human and digital interactions

Chief among these is genuine omni-channel support. No two SMEs are the same – each one has its own unique financial needs – and one-size-fits-all digital solutions aren’t the answer many institutions hoped they might be, a few years back.

Yes, Australian consumers and businesses are increasingly choosing to manage their banking affairs online. Branch interactions fell by 46 per cent between 2019 and 2021 and 98.9 percent of bank transactions are now digital, according to the Australian Banking Association’s Bank On It – Customer Trends 2023 report, published in partnership with Accenture.

But that doesn’t mean your SME customers want to do everything online, every single time. Rather, they’re looking for personalised proactive advice based on digital insights.

That’s why institutions that are able to offer the lightning fast underwriting and lending decisions a digital service delivery model can enable and an intelligent human touch too will be well placed to earn their trust and long term loyalty. 

Consider the example of Judo Bank, an Australian neobank that sought to better serve its SME customers by revamping its digital services. The bank introduced new digital tools that allowed entrepreneurs greater autonomy through enhanced self-service options and enabled bankers to focus on high-value interactions. These changes led to better operational efficiency and higher customer satisfaction and loyalty, showcasing the benefits of agile and customer-centric approaches in today’s rapidly evolving banking sector.

Transforming data into insights

As will those that can help businesses exploit their fast growing repositories of business data for actionable insights. Top of the wish list for many SMEs is a single, consolidated picture of their business activities and finances, one that can inform their decision making process. 

Help them achieve it and they’ll be willing to share more data with you. Having that increased visibility into their operations will see you well placed to upsell and cross sell your services, at pivotal milestones.

You’ll also be able to position your business banking team as trusted financial managers, and genuine partners on the growth journey.  

 Adding value at every turn

It’s common for SME owners and leaders to wear several hats. They’re not always in the position to access or afford the specialised services and support their larger counterparts in the enterprise sphere are able to draw upon as a matter of course.

Financial institutions that can help them plug that skills and services gap, by working alongside external service providers to create new offerings that meet their needs, will open up new revenue streams for themselves. 

Moreover, being able to add genuine value in this way will strengthen your relationships with business customers; thereby creating the trusting bonds that lead to long term loyalty and valuable referrals.

Tools to make the task easy

Expanding and elevating the suite of services—and the standard of service—you provide to your SME customers can be a challenge, especially with legacy processes that often hinder progress and complicate the delivery of swift, seamless customer experiences. 

Often, banks initially attempt to address the digital banking needs of SMEs using tools designed for retail banking, only to find that SME requirements are significantly more complex. Issues such as identity verification and entitlement management demand bespoke solutions that retail systems are ill-equipped to handle.

This is where engagement banking platforms come into play. Composable and pre-integrated with advanced banking capabilities, these platforms enable banks to become financial ‘Super apps,’ providing a consolidated hub for everyday and business banking needs. This empowers customers to manage their finances more efficiently under one roof.

Next-generation platforms simplify the customer experience and address specific SME needs at scale. By offering tailored value propositions, they enable financial institutions to modernise their operations and overcome the limitations of legacy systems and technological debt.

If winning mind and market share in the under-serviced SME sector is on your organisation’s agenda in FY2025, it’s foundation technology you can’t afford not to have in your ICT stack. 

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Iman Ghodosi

Iman Ghodosi

Iman Ghodosi is the Managing Director Australia and New Zealand at Backbase

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