Challenger banks redefine SME banking

Automation may be driving innovation in the provision of banking services to SMEs, but the human element continues to play a critical role in relationship management and customer support.

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The SME segmentation challenge

Perhaps the most important segmentation of banking services is between microbusinesses and the wider small and medium-sized enterprise (SME) population. In most developed economies, the vast majority of small businesses are microbusinesses – one- or two-person operations – while the core SME base typically employs between 10 and 100 staff.

Microbusinesses are relatively simple to serve. Their banking behaviours are highly consumer-like, meaning incumbent banks can often slot them into their retail operating models.

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