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Banks should seize the opportunity to serve SMEs better

Small and Medium Enterprises (SMEs) are the backbone of Europe’s economy. European Union[1] data shows that SMEs account for 99% of all businesses by number across the bloc, while in major markets such as Germany, SMEs can account for up to 82% of all economic value created.

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Banks should seize the opportunity to serve SMEs better

In a new white paper, Johan Strand, Chief Financial Officer at Zimpler, argues that SMEs need better payment services as they recover from the pandemic.

Europe’s banks should seize this opportunity to improve their payment services, cement relationships with SMEs and grow revenues.

Despite their economic importance, delivering great service to SMEs has long been a stumbling-block for Europe’s banks.

Financial infrastructure provider Banking Circle recently found[2] almost half of Europe’s SMEs were looking for new banking and payments services providers given their low levels of satisfaction with current providers.

As we recover from the pandemic, small firms across Europe are going to be looking for digital-first, low-cost payments services that are easy to integrate and simple to operate. At a time of rising competition, banks must offer payment solutions that meet the needs of this important segment or risk losing market share.

In part, the impetus for new payments systems from the fact that SMEs are hiring a wide range of freelance and part-time staff – and are therefore paying more people, more frequently. At the same time, demand for electronic payment on the part of consumers and businesses is rising fast, with cash now preferred by just 16% of consumers, according to data from Cardtronics.

While SMEs have a wide range of options to choose from, many current non-bank options can be expensive. What’s more, SMEs can benefit from a bank’s experience in risk management and dispute resolution in payments – as well as the capacity to offer a wide range of services alongside payments, from current accounts to loans and insurance.

In our new white paper, Solving Payment Services for SMEs, we argue that banks have a real opportunity to enhance customer loyalty and grow their revenues by offering more flexible, digital-first payments solutions to SMEs. With the EU’s second Payment Services Directive (PSD2) making partnering with third-party services easier through open APIs, banks should broaden the range of payment services they offer SME clients.

In particular, the new generation of account-to-account (A2A) payment services look attractive, offering SMEs low costs per transaction and immediate settlement, as well as rich transaction data and reporting.

Currently, only 20% of Europe’s banks offer A2A payments, according to the Aite Group – but as many as 9 in 10 consumers and small companies would switch banks if a rival bank were to offer A2A services[3].

At Zimpler, we offer an end-to-end SME payments solution that gives access to instant bank payments and payouts. We also provide compliance tools which address SME concerns related to AML and Know Your Customer (KYC) regulations, providing clients and their banks with rich transaction data for both compliance and sales analysis purposes.

Whether they’re traditional bricks-and-mortar players or digital-only “neobanks”, banks should be looking to partner up with end-to-end payments solutions that respond to SME needs for speed, flexibility and security. In doing so, Europe’s banks have the opportunity to protect their market share, build relationships with their SME clients and expand offer low-cost, high-performing payment solutions.

To find out more about the SME payments opportunity for European Banks, download our white paper here. To get in touch for a discussion about SME payment solutions, please visit www.zimpler.com or e-mail alexander@zimpler.com 


[1] See data from Eurostat: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Statistics_on_small_and_medium-sized_enterprises

[2] See The Fintech Times, 29 May, 2020: https://thefintechtimes.com/banking-circle-study-of-online-sme-merchants-reveals-banking-gaps-that-payments-businesses-can-fill/

[3] See the Aite Group, cited in “What’s New in How People Prefer to Pay”: The Paypers, August 2020: https://thepaypers.com/reports/payment-methods-report-2020-whats-new-in-the-way-people-prefer-to-pay/r1244363

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