Precision Synthetic Data for Unmatched AML Standards

Achieve faster compliance, reduce risk, and enhance detection with our advanced synthetic data solution designed for rigorous financial compliance.
Learn more
Request Demo
  • Blog

Collaborative Innovation to Reimagine SMB Banking and Finance 

Collaborative Innovation to Reimagine SMB Banking and Finance
Picture of Amrit Satpathy

Amrit Satpathy

Ecosystem Manager

Frictions and disruptions—words that have strongly impacted economic projections over the last two years. Business shutdowns, renewed outbreaks, and financial downturns due to the pandemic painted a strenuous landscape for almost all industries, and Small and Medium Businesses (SMBs) were deeply impacted by the crisis.
As the recovery phase begins to settle in, several countries are channelling their support to revive their economic growth through government policies for flexible financing options and digital infrastructure initiatives such as Open Banking and Real-time payments. The spotlight on SMBs is heavy here–considering they are the backbone of most emerging economies, accounting for about 90% of businesses and more than 50% of employment worldwide, and can even serve as an answer to the estimated 600 million jobs needed by 2030 to absorb the growing global workforce.

Financial institutions and fintech providers move to bridge the gap

Acknowledging the underserved status and the potential of the SMB segment, fintechs providers and alternative lending sources are revolutionising the state of SMB banking by introducing a slew of digital banking services and business automation tools. Financial institutions (FIs) are equally hot on their heels in revising their approach toward SMB lending, closing the gap between the supply and demand of bespoke products and addressing fragmented processes via offerings such as access to revenue-based finance, virtual credit card offerings, and payment systems to help streamline business operations. In order to secure their market standing, traditional banks are following a multi-pronged approach to help SMBs.

Financial Institutions Collaborate with Fintech to Drive SMB Banking Initiatives

Detailing the multi-pronged approach to re-imagine SMB banking

On the one hand, banks are able to develop their in-house product line through their own resources, and on the other, a majority have taken the collaborative approach to accelerate the SMB banking journey by teaming up with modern fintech providers to launch a variety of Banking products for SMBs. Here’s how this pans out:

1. Fixing financing for SMBs

In 2016, Barclays partnered with Propel in the UK, an asset finance provider, to dispense credit lines to SMBs for securing equipment and vehicle financing. The strategic collaboration is one of the many FinTech partnerships that Barclay’s has chosen to do over the years, with SMBs now having access to up to ~$2.3M in loans within 24 hours. When the small businesses in the US grumbled under Covid’s pressure in 2020, American Express acquired Kabbage, a fintech provider that dispensed funding directly to small businesses using its automated online platform. Now, it enables the fleet of small business customers to secure credit lines, access checking accounts and credit card processing.
In 2021, NatWest rolled out Mettle, an SMB-focused bank in competition with the rising challenger banks of the UK, providing access to current accounts and tools for cash flow forecasting as well as invoicing tools to sole traders and SMBs of the UK. With the ease of opening accounts within minutes to effective integration of digital wallets, Mettle has created a fleet of 50,000 aspiring SMBs since then. In 2022, Commonwealth Bank in Australia acquired a 20% stake in Brisbane-based fintech Paypa Plane. As a part of this investment, the pair entered into a partnership to create a superior payments experience for SMBs and help them transition to PayTo, a New Payments Platform-based product that allows businesses to accept real-time direct debit payments from customers.
Another prominent example is that of Marcus, a digital banking arm of Goldman Sachs which partnered with C2FO, a working capital-focused Fintech company, to allow access to flexible and affordable working capital credit to small suppliers and vendors.
2022 saw a surge in digital lending products for SMBs as many came forward with innovative solutions. The National Australia Bank, ABN AMRO Bank in the Netherlands, and the Canadian Imperial Bank of Commerce launched new offerings in the SMB digital lending space.

2. Digital business tools to power digital SMBs

Keeping in mind the heterogeneous nature of the dynamic SMB space, FIs are making a move towards generating a tiered range of business tools that add value to their SMB customers. Some of these are:
  • Visa joined hands with FloCash, a payment wallet company, to launch Flostore, powered by a Visa digital wallet and the Flocash pan-African payment platform, which can help small businesses accept digital payments, manage supplies and access financial services across Africa.
  • TSB Bank teamed up with BankiFi in the UK to introduce Revenu, an app that offers a simplified payment system and access to working capital credit to ease chasing long-overdue payments.

3. Crossing the cross-border payments chasm

Given the global growth in e-commerce, SMBs have expanded their footprints across different countries and in this context cross-border payments are a critical factor to support their market expansion objectives. Below are some of the initiatives from financial institutions in how they are proactively helping SMBs in processing complex international payments:

  • With its subsidiary PagoNxt, Santander has enabled SMBs access to instant payment solutions across Europe.
  • In 2021, BBVA became the first Spanish bank to launch SWIFT Go to streamline international payments for SMEs. Several other banks such as Bank of New York Mellon, DNB, MYBank, UniCredit, Sberbank, and Société Générale also participated in the launch of SWIFT Go.

A new horizon for SMB banking

Reimagining banking services for SMBs can unlock new and sustainable revenue streams for incumbent banks. With electronic and API-based access to SMB data such as sales transactions, supply chain activities, payroll expenses, marketing and advertising expenditures, banks are in a position to re-architect digital payments, credit underwriting, and several other banking services for SMBs. A large number of SMB-focused Fintech infrastructure firms also enable banks to accelerate their SMB banking initiatives and quickly launch contextual products for business customers.

Reimagine SMB finance with NayaOne marketplace

NayaOne helps financial institutions get instant and API-based access to a wide variety of SMB-focused FinTech infrastructure innovators on its Marketplace.

Coupled with the access to digital sandbox capabilities such as IDEs for code-developments, synthetic datasets for model training and simulation testing, and path-to-production enablers, Banks may quickly embark upon their innovation journeys to reimagine banking for their business customers.

Get in touch with us

Reach out for inquiries, collaboration, or just to say Hello!

Related press releases