Two leading banking technology providers, Mambu and nCino, discuss these barriers in a new podcast, Breaking Down Barriers to SME Finance.
Richard Morgans, Managing Director, UK and Ireland, for Mambu, said: “Securing finance for SMEs has always been difficult. We saw an acceleration in the ability to get better funding, backed up by evaluation through a more data-driven process. It’s less of an obstacle now than it was in the past, but there’s still a lot to do.”
Mambu, which provides technology infrastructure to 230 financial service providers in 63 countries, has produced a report, Small Business, Big Growth, to examine the financing challenges of SMEs.
Morgans says the rise of neo-banks has given SMEs options: “This new wave of SME lenders came into the market and started lending to sectors that found it frustrating to go to larger institutions. in the past New entrants fill an unmet need and do things faster and more efficiently.
Morgans says the drop-out rates of businesses going through a loan application have been a huge problem for banks: “You’d go so far in an application process and then suddenly you’d be faced with another requirement or a manual document. to download, but without the possibility of being able to scan something efficiently or recognize it in a certain format.
“How do you get this seamless journey, this frictionless experience, so you don’t have that drop, so you don’t have the customer looking elsewhere?”
Morgans says culture is an issue: “Some of the clients we serve are legacy brands – and sometimes that comes with a bit of legacy culture. These institutions need to demonstrate that they are committed to transforming technology and move with agility and flexibility.
“We’re now in a very strong market for technology transformation, and it’s consumer-driven.”
Thomas Byrne, Managing Director, Europe, Middle East and Africa, Commercial and Mortgage, for nCino, says consumer pressure has driven rapid changes in retail banking for consumers – and merchant banking is now catching up. its delay.
“The financial crash saw some big high street banks rush to digitize and invest heavily in customer experience, lending and app-based banking,” he explains.
“However, this investment was not shared equally. There was a huge amount of investment in the consumer space, while corporate banking still felt like stepping back in time.
“Customers also want something that feels automated and intuitive for business banking. These consumer expectations carry over to SMBs and complex businesses because that’s what people have become accustomed to.
“A decade ago, many fintechs rushed into this consumer space because it was the best understood and had the most publicly available data. That’s true on the consumer side. businesses now, and I think we’re going to see a real innovation boom in merchant banking.
Byrne says nCino, which specializes in cloud-based banking software and serves 1,500 financial institutions, has watched the pace of this trend of improving business banking during the pandemic.
“Covid-19 has definitely been an accelerator,” he says. “We moved to a world where it was not just consumer expectations, but also business realities that were forcing digitization on lenders.”
According to Byrne, successful banks will be those that have genuinely changed their culture and are proactive in understanding customer needs – using the wealth of data at their disposal, a combination of high-quality technologies and the judicious deployment of their staff. .
“No lender – new or old – wants highly paid people reading data on a screen that can be delivered digitally to a customer. They need to learn from technology, feed it back to customers, and have a truly meaningful conversation. is this human value of creating ideas to help financial institutions – and help SMEs.”
Richard Morgans thinks big banks are ready to embrace change: “They are humble enough now to realize some of their mistakes. It used to be that some customers in financial difficulty had no choice where to go, but now we see flexibility and choice in the marketplace.
“If we can embed this data-driven process across the financial institution, we expect to see better outcomes for the consumer.”
And Thomas Byrne thinks the future is bright: “If you combine changing consumer expectations, technological change and the availability and abundance of data, I think we’re in a good space to see big innovations. .”
Click on here to listen to the podcast.