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Is co-operation between banks and fintech's the key to financial inclusivity?

Is co-operation between banks and fintech's the key to financial inclusivity?


Our Chief Product Officer, Marijke Koninckx, is a champion of financial inclusivity for small businesses and has published articles and has commented on this important topic in several publications.

In her most recent article published in Retail Banker International, Marijke explores how SME's are continuously underserved by banks and how the rise of technological solutions from Fintech's are bridging this gap. The question is, is co-operation the solution to help banks be more financially inclusive towards SMEs, as well as helping them to get back into the heart of the business?

Check out the article in full here or read on for the highlights.

Setting the scene 

Thanks to the evolution of technology, financial services that were once only able to serve larger corporations can now be accessed to a broader audience - which has been a key driver for the democratisation of financial services across the world. 

However, the small business banking segment continues to be neglected and underserved by banks and financial institutions. Despite small and medium-sized enterprises (SMEs) making up 90% of businesses globally, there is a massive disparity between the level of service that banks are providing them to help run their business and thrive, compared to larger businesses. With the negative economic position that most global economies find themselves in, this needs to change for SMEs as they are the proverbial backbone of these economies.  

How are SMEs being underserved by traditional banks? 

There are high barriers of entry in traditional business banking and SMEs often struggle to meet such high demands that are placed on them by banks. These points of friction stretch across various key touchpoints in their customer experience; from the point of sign up to applying for specific services or financial solutions. In order to move forward, banks require a vast amount of information from the small business which, for time poor SMEs, is a laborious and time-consuming task. This is a prime example of how banks have unintentionally siloed their SME customers and ignored their direct needs. 

How are fintech's serving SMEs with financial inclusivity in mind? 

Over the last few years, fintech's and other market challengers have been able to provide services and solutions to SMEs that they truly need in order to run their business and grow. The success of these solutions for the SME segment should be evidence enough to banks that there is extraordinary demand for these workflow-based technological solutions which improve the lives of small business owners and the day-to-day management of their business finances. 

These solutions have provided SMEs with improved efficacy, lower transaction fees, improved customer and resource outreach, and an ability to monitor and manage cashflow all from one place. All these benefits have been brushed over by traditional banks who continue to provide solutions that follow a one-size-fits-all approach, whilst fintech's are offering more financially inclusive solutions. 

Is co-operation the answer? 

Despite fintech's making headway in the market with SME targeted solutions and are more likely to respond to the demands of the SME, it is important to note that they may never truly take the place of traditional banks and financial institutions. This would involve a rapid shift in consumer behaviour based on centuries of trust and strong bank to customer relationships; this trust is such a key factor in the decision-making process where choosing a place to hold your capital is concerned. So, the banks have this on their side. 

However, to once again be the 'front door' or the 'go-to' financial provider for SMEs to run their business from, they must adapt and start meeting the individualistic needs of the small business owner. New technologies, like open banking and embedded banking are key for banks to engage with their SME customer base in a fresh way; providing them with the tools they need to run and manage their business financials. 

Co-operating with a fintech like BankiFi, who are not seeking disruption but co-operative relationships with banks to help them provide digital solutions via embedded banking that meet the needs of their SME customers; placing these traditional financial institutions back into the heart of the small business. We believe that this co-operation allows banks democratise their financial services and that these tailored offerings will allow SMEs to grow and thrive. 

Want to know more about our suite of digital solutions?

If you're exploring ways that your bank or financial institution can serve SMEs better and become more financially inclusive, simply arrange a demo of our solutions via the button below.

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About Elle Rushby | Marketing Executive

Elle Rushby is the Marketing Executive for banking and technology company, BankiFi. With a passion for content creation, copywriting and carving marketing strategies (to name but a few), she is very much enjoying implementing her creativity into the world of BankiFi.

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