SME Banking Outlook 2022: Real-Time Data, Cheaper Processing, and Cryptocurrency

Look into the future of SME banking.

SME banking trends set to grow in 2022 including better data intelligence, reduced cost payments processing, and increasing use of cryptocurrencies.

SME banking dominates the business finance market. Small enterprise lending currently represents 90% of businesses and 50% of employment worldwide making it a very valuable industry. Having said that, COVID-19 has forced SME banks to adapt quickly over the last three years.

Tech and innovation trends over the coming months and years look very promising. Notably, payments processors and aggregators are becoming increasingly sophisticated. Many firms are increasingly utilising AI for real-time data and innovative fintech services to enhance their offerings and reduce finance-associated costs. 

But how have the past two years impacted SME banking, and how are the years ahead shaping up? Read on tovfind out.

SMEs faced significant challenges over the last two years but innovation hasn’t slowed

SMEs are an important element of UK business and currently account for 5.5 million small businesses with 0 to 49 employees. To put this in perspective, this accounts for 99.2% of the total business UK population! 

Innovation among SMEs and fintech hasn’t slowed down. COVID-19 has accelerated the digital transformation of mobile apps over the past two years. According to Pay.UK, 15% of SMEs said they now use mobile or online banking more often than before social distancing measures were introduced. To keep pace with digital banking needs, SME banks are advancing their technology in both loan management and onboarding—for instance, to offer clients a faster set-up process.

Looking ahead: SME banks to provide real-time data and financial aggregators to businesses

The coming years are set to see even more banking developments specifically aimed at SMEs. Increasing users are adopting the latest fintech innovations to improve their financial intelligence and reporting and deliver better services. In the near future, expect to see increased usage of real-time data to give customers better credit offerings and a rise in the popularity of client-facing account aggregators. 

In the next three years, business banking will be greatly enhanced by the use of real-time data analytics which will give businesses a better financial services. Utilising a combination of both big data and artificial intelligence, SME banks will have the opportunity to perform intuitive analyses during transactions that will enable customer insights like never before. Allowing banks to provide SMEs with better products and services, such as improved loan rates and faster credit scoring. Overall, by combining AI and real-time data, SMEs will be better supported following the impact of COVID-19 and changing levels of government support. 

Furthermore, customer-facing financial aggregation platforms have increased in popularity in recent years and look set to enter mainstream SME banking in the near future. Aggregators are highly beneficial for SMEs and startups as they combine account data from various sources into a single, real-time view. For instance, a business can log in and view all their financial accounts via a user-friendly platform where they can check balances, initiate transactions, and open virtual accounts.  

Looking further ahead: increasing use of cryptocurrencies and cheaper payments processing

The payments processing landscape is undergoing significant change and this will have a major impact on the way SME banks transact. There has been discussions for several years that the oligopolistic card networks Visa and Mastercard need to be broken up and replaced with smaller networks that would engage in healthier competition with one another. The end result of this for SMEs is that they could potentially see cheaper processing fees.

Alternatives to central bank-issued currency show promise in the SME banking landscape as well. These include increased use of digital assets for payments such as Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH) and the use of utility tokens to create internal economies.

Having said that, cryptocurrency technology and its use as a financial technology remains nascent and is still developing and maturing. While it’s beneficial to start taking notice of the potential digital assets hold for the industry and the direction they are taking in the coming years, it’s yet to be seen whether they’ll drastically change the SME banking landscape in the short term

Innovation is ubiquitous, but there is a way to go yet 

The future is bright for the SME banking industry, with the development of new technologies that will give small enterprises better financial standing. However, there is still plenty of development to be done before SME banking truly meets the requirements of small businesses and startups, particularly those in need of enhanced—and easy to use—financial data, intelligence, and seamless transaction processing.

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SME Banking Outlook 2022: Real-Time Data, Cheaper Processing, and Cryptocurrency

December 19, 2021
3 min
Frank Silva
Chief Finance Officer, rebank

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Frank Silva
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