Despite making up more than 90% of businesses worldwide – and contributing roughly half of total economic value added and more than two-thirds of business employment – SMEs often remain underserved and overlooked by the banking sector, especially when it comes to onboarding and opening accounts. Unlike for retail customers, many banks fail to offer their SME clients and prospects a fast, seamless and fully digital onboarding experience, instead applying the same cumbersome and drawn-out processes applied to larger, more complex corporations.
This is a big pain for SMEs, many of whom count on quick and easy access to financial services for their day-to-day operations – and it can often lead to them opening accounts with fintechs or neobanks. As a result, incumbent banks are losing ground, but the opportunity for getting onboarding right is huge. In 2023, the SME market was valued at USD 129.49 billion, and it’s poised to grow to USD 269.84 billion by 2032. Banks that actively focus on appealing to SMEs could find themselves taking a major leap ahead of their competitors – and those who don’t may find themselves left behind.
Why banks struggle to onboard SMEs efficiently
Digital onboarding technology and processes have come on leaps and bounds in recent years. Many banks now offer fast, fully online onboarding experiences to retail customers, leveraging technologies like AI-driven identity verification, biometric authentication and open banking.
However, many of those same banks are failing their SME customers, whose onboarding processes often involve tedious paperwork, multiple rounds of document submission, long wait times for approval and lack of clarity in communication. In fact, 87% of corporate treasures surveyed by Encompass said that they have abandoned a banking application at least once due to time.
The problem is that SMEs often find themselves victims of the “middle-child” problem. As businesses, they’re excluded from many of the digital perks that retail banking customers receive; while at the same time, they don’t receive the highly tailored services, dedicated relationship managers and custom financial solutions that larger corporate banking customers do.
So why have SMEs been overlooked by banks, especially when it comes to onboarding?
There’s no doubt that the onboarding process for SMEs is more complicated than it is for individuals. Business structures are more complex, regulatory compliance requires extensive due diligence, verifying ultimate beneficial owners can be challenging and financial data is often fragmented or difficult to standardize. However, thanks to innovative new approaches to AI-powered document verification, automated data integration and machine learning-driven risk assessment, banks no longer have any excuse to not provide a UX-friendly, seamless digital onboarding experience for SMEs.
Before we dive into exactly how banks can prepare themselves to offer a best-in-class digital onboarding experience tailored for SMEs, let’s take a closer look at why it’s imperative for them to do so in the first place.
The benefits of getting onboarding right, for banks and SMEs
A quick, seamless digital onboarding process for SMEs can help banks to appeal to a wide range of new customers, many of whom are unhappy with existing products and services on the market. McKinsey notes that banks who embrace the digital-lending revolution are able to bring “time to yes” down to five minutes, and time to cash to less than 24 hours. They point to one large European bank who “increased win rates by a third and average margins by over 50 percent” as a result of significantly improving the onboarding speed for SMEs.
The value of a strong onboarding process for banks goes far beyond just initial conversions. Instead, onboarding should be seen as the first step in a long and fruitful partnership between both parties – a digital handshake that sets the tone for the entire relationship.
If banks can successfully manage their SME clients and keep them happy beyond the initial onboarding stage, they’ll unlock longer-term benefits. These include cross-selling and upselling opportunities, reduced cost-to-serve and compliance risk through automation, and a scalable, repeatable onboarding model that drives sustainable growth.
This is a win-win situation where SMEs benefit from faster and easier access to the financial services they need, while banks unlock new revenue streams and long-term customer loyalty.
Achieve seamless SME onboarding with SBS solutions
By partnering with an experienced banking software provider like SBS, you can deliver a digital onboarding experience that’s intuitive and seamless for SME customers – helping to build trust and loyalty from the very first step. And with digital lending solutions tailored to SMEs, you can take that experience even further.
With our Digital Banking Suite (DBS), your bank can offer fully digital, multi-touchpoint onboarding experiences that prioritize speed, personalization and compliance from day one.
Integration light, ROI heavy. DBS ships with out-of-the-box connectors for SBS core banking software, common ID Legitimation & AML systems. Typical clients see payback inside 12-18 months through reduced manual costs, lower abandonment and incremental lending margins.
Key features of our solution include:
- End-to-end, API-driven onboarding journey.
- Embedded features, including KYC, digital identity verification, e-signature, document capture and real-time updates.
- Omnichannel UX across web, mobile and branch.
- Transparent onboarding status for both SMEs and employees.
- Real-time tracking, proactive communication and cross-team visibility.
Our unique solutions offer much more than just seamless onboarding for your SME customers. With our modular capabilities, you can support your clients throughout their entire journey, providing robust products such as:
- SME lending. Faster, data-driven loan approvals with automated risk assessment and real-time credit scoring.
- Payments & cash flow management. Seamless integration with invoicing, payroll and expense tracking.
- Tax & accounting integration. Direct integration with accounting platforms to simplify tax reporting and compliance.
- Business insights & segmentation. AI-driven analytics to provide personalized financial insights and growth recommendations.
- User & role management. Flexible access controls, ensuring the right employees have the right permissions at all times.
Ready to turn SME friction into competitive advantage?
It’s time to take advantage of one of the largest, most underserved markets available to banks. By rethinking your digital onboarding process for SMEs, you can instantly appeal to millions of new customers, and beyond that, create life-long relationships.
Bank leaders who digitize both on-boarding and lending capture the full revenue loop – while rivals still relying on manual processes fall behind.
Next step: Contact a member of our team today and find out how SBS can help you to create an onboarding process and a suite of banking solutions to go above and beyond the needs of SME customers.