What do SMEs want from their banks?


Most American businesses are smaller firms, employing nearly half of all American workers, according to the Small Business Administration.

Even the COVID pandemic – and the resulting economic decline – has not been powerful enough to stop these businesses from launching. More small and medium-sized enterprises (SMEs) opened in 2020 than in 2019.

While these companies are a key part of the global economy, their lower loan values ​​and greater risk of failure have traditionally left them underserved by the financial industry.

But that is starting to change. Former financial institutions (FIs) have started to view SMEs with more interest in recent years, while FinTechs, neobanks and other digital players have tried to entice midsize companies with loan products. practices and online banking tools.

The headache of late payments

And what do SMEs expect from their banks? The decision makers at these companies are looking for the same fast and convenient digital service they enjoy as customers, especially as small businesses increasingly depend on transparent payments.

Late payments from customers and industry partners have become a major concern for SMEs, with PYMNTS research showing that 14% of B2B receivables were past due at companies with less than $ 50 million in annual revenue in 2020.

And a 2020 Mastercard study found that the pandemic forced 82% of SMEs in the United States to change the way they receive and send payments, with half adding a digital service to raise funds and ease cash flow concerns. .

The study noted that cash flow has become an issue for SMEs as the COVID crisis has exacerbated many of their payment frictions. Almost half of all SMEs were on one default payment of bankruptcy.

In February 2021, SMEs remained on shaky ground, a study found, with 80% saying they would need social or financial support to survive another foreclosure, even though 74% said “ financially resilient ”.

Want to know more about this topic? Download your copy of the Next-Gen Commercial Banking Tracker, a PYMNTS and FISPAN collaboration.

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NEW PYMNTS DATA: AUTHENTICATION OF IDENTITIES IN THE DIGITAL ECONOMY – DECEMBER 2021

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