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Why banks are missing an opportunity to capture the lucrative small and medium enterprise market

Author

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  • Pooley, Henry

    (Chief Commercial Officer, Fraedom fraedom.com, Visa Europe Limited, 1 Sheldon Square, Paddington, London, W2 6TT, UK)

Abstract

This paper provides insight into the current small and medium enterprise (SME) and banking landscapes, exploring the challenges both face, and the strained relationship between the two, before advising on methods through which this relationship could be improved. The paper goes on to explore how FinTech firms could play an instrumental role in the evolving relationships between banks and SMEs, and then outlines four routes that banks could explore to take advantage of this highly lucrative market sector: invest in their own FinTech; develop their own technology; partner with FinTechs; or build an open banking ecosystem. The paper concludes that banks tend to take a pragmatic approach to problem-solving so are likely to use a combination of the proposed solutions and enlist the help of multiple providers. In this way, banks will be able to capitalise on the opportunities associated with SMEs and keep up with the rapid pace of change within both the banking industry and society as a whole.

Suggested Citation

  • Pooley, Henry, 2019. "Why banks are missing an opportunity to capture the lucrative small and medium enterprise market," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 13(4), pages 337-351, December.
    • Handle: RePEc:aza:jpss00:y:2019:v:13:i:4:p:337-351
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    More about this item

    Keywords

    small and medium enterprises; SMEs; FinTech; banking; payments;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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