Every country has a clear understanding of the importance of the SME sector in terms of economic development. Meanwhile, the level of advancement of the SME sector varies widely in every country. Together with the economic environment, one of the main backbones of the sector is its communication with the banking sector. The idea of ensuring that the two sectors are able to communicate properly encouraged one of the founders of the SME Banking Club to bring together bankers and industry experts. Six years after it was founded, the SME Banking Club became one of the main platforms for networking between banks and other financial organizations contributing to the development of small and medium-sized businesses in four regions. The company’s ambitious plans include entering the UAE and Singapore markets.
The history of the SME Banking Club started in 2010. Being involved in SME banking at one of the top banks in Ukraine, Andrey Gidulyan felt there was a lack of information about the market and a lack of networking between bankers and industry experts. This was what motivated him to create a group on LinkedIn to share information. The LinkedIn group gave rise to the SME Banking Club as a community of SME bankers, which soon became a professional banking community for providing information on what national, regional and local banks were offering to micro, small and medium-sized businesses.
The SME Banking Club’s first conference was organized in 2012 in Kyiv, Ukraine. Gidulyan was the company’s only team member at that time. Currently, the SME Banking Club offers online services and organizes conferences in four regions: the Caucasus, the CIS, CEE and MENA. “We survived, we are developing, and we love what we do, we love SME banking. The positive feedback that we receive from SME bankers motivates us to move forward,” said Gidulyan.
“Eighty percent of conference participants, SME bankers, are ready to recommend us to their colleagues,” said Gidulyan, adding that this factor is the main measure of the SME Banking Club’s success. “We see that what we do and what we love to do is also interesting and necessary for bankers.”
The SME Banking Club will soon hold three more annual conferences in Georgia, Ukraine and Poland. The main topics of discussion will be the latest trends developing in the industry.
At the upcoming conference in Georgia, startup banking will be discussed, as banks are entering this segment.
Non-financial services that banks are implementing to help their SME customers to scale up and break through will be a topic of discussion at all three conferences. The SME Banking Club team has invited digital-only banks and online SME lenders to their conference in Krakow in November to talk about purely digital SME banking with paperless processes for opening a current account in three minutes and online lending within 24 hours. “We will discuss how to achieve successful partnerships between banks and fintechs, as we see now that the right model is cooperation and not competition,” Gidulyan explained. Leasing and factoring products for SMEs will also be much discussed in Krakow.
Over 300 attendees are expected at all three conferences this year, including banks, financial companies working with the SME segment (like factoring and leasing organizations) and fintechs.
What SMEs Need
The main demands of the SME sector in relation to banks vary from country to country and by different types of customers. However, the general trend is that customers are demanding less banking from banks. They want to spend less time on banking transactions and more time on business.
First of all, there were the millennials—the younger generation of entrepreneurs—who expected banks to provide a completely online onboarding process, as well as other paperless processes and the ability to complete certain simple actions like opening a current account without having to visit a branch. Now, neobanks are offering just those things. And not only young entrepreneurs but also older ones are starting to expect the same services. Regarding transactional banking, making payments for customers invisible, without having to spend any extra time on them, is now the number one priority. It’s all about integration of the Internet and mobile banking with accounting systems, with CRMs, so as to automate everything that can be automated by using AI and machine learning to avoid spending any addition time on banking operations. This refers to everything to minimize the number of contacts a customer has with the bank and also to partner SME customers with non-financial services.
Going forward, banks will not only need to invest in their SME programs, but they will also have to devise innovative products and take a different approach in order to win over the SME segment.
What Banks Are Offering
Once banks introduce an innovation, the competitive environment pushes them not to wait for several years to find out the outcome. Banks are working on numerous projects to bring something new to the market. They understand the importance of trying to deliver what customers need at the moment.
Banks should think about those they served yesterday, are serving today and will serve tomorrow. Of course, banks do no earn profits from Generation Y or millennials. However, many banks are putting a lot of emphasis on these categories of customers, including start-ups and other projects that are investments for their future customers. This is a common strategy for every brand. They always take one step forward beyond the existing generation.
Traditionally, SME business has been associated with micro lending. Meanwhile, the practices of global leaders show that SMEs are not only about lending. They involve liabilities, deposits, current accounts, card products and non-financial services. Currently, consumers expect more than just lending from their banks. They require that their banks be their consultant, their IT service provider and their financial partner. Consultations, training, office space, ATM cars and even translation services are what modern banks are offering their clients in response to growing demands. Another challenge for the banking sector is coming from Generation Z. Having grown up with electronic devices, this segment requires a special approach based on modern technologies.
The SME Banking Club’s Future Plans
The SME Banking Club’s strategic plan is to be the number one source of information about, and insights into, what is going on in SME banking in the regions where it operates. For this to happen, the team plans to continue to develop the products that they already have, such as its –annual conferences and online resources, including unique content that is published on its website: the Innovation Library, the Marketing Library and interviews with SME bankers. This information is available free of charge, and it will stay that way forever.
This year, the SME Banking Club launched audio podcasts in which Olena Gryniuk talks to SME bankers and fintechs about SME banking. The development of studies and reports on the SME market and SME product topics will be continued.
The Club plans to intensify its activities in the MENA region and open up the Asian region. Last year, the MENA SME Banking Club Conference in Cairo, Egypt, was organized, which was quite successful. “As ex-SME bankers, we understand banks’ needs, and when we go to the region with all our products, we take into account region specifics (by doing content localization, by developing regional reports and studies) and bring the best international practice to the local banking community,” said Gidulyan.