May 16, 2020

Why banks need to get personal for a piece of the SME pie

Federation of Small Businesses
Kyle Ferguson
Kyle Ferguson
5 min
Kyle Ferguson is theCEO ofFraedom, theglobal companythat assists businesses to succeed and grow. It provides an intuitive, easy-to-use spend management...

Kyle Ferguson is the CEO of Fraedom, the global company that assists businesses to succeed and grow. It provides an intuitive, easy-to-use spend management system. Here he shares with us his insight into the importance for banks to personalise their approach in targeting the SME market:



The SME market, for the majority of banks, is becoming a key target sector. In the UK, according to the Federation of Small Businesses (FSB), small businesses accounted for 99.3% of all private sector businesses at the start of 2017 and 99.9% were small or medium-sized (SMEs), while the combined annual turnover of SMEs was £1.9 trillion, 51% of all private sector turnover in the UK. SMEs act as a crucible of innovative new ideas and a cradle of entrepreneurship. They satisfy local demand for services; often provide key support to larger enterprises and are an important creator of local jobs.

As technology and expectations have evolved, so too have the needs and expectations of SMEs. Driven by experiences and offerings in our personal lives, these often more agile organisations are now demanding a better digital approach. This is reflected by 57% of SMEs that now want to move to an online/mobile banking business environment and the fact that in 2017 40% of all SME financial transactions were completed online or via mobile. This number is only predicted to increase as younger, more digital-savvy employees take up senior roles.

However, despite playing such a vital role in society and being such a lucrative market, banks are currently struggling to meet the demands of SMEs and deliver the more personalised service and consumer-focused offering the majority desires. But where is this need coming from and why must banks get more personal to stand a better chance of attracting SME customers?

Personal experiences

Currently, banks are far more geared towards big businesses than they are SMEs. While lowering costs and up-weighting rebates might work for large corporates, they don’t pack the same punch for SMEs. Instead, SMEs want their banks to offer the same service they get from banking in their personal lives.

Customer experience has come on leaps and bounds in the world of consumer banking. Largely influenced by technological innovation, we now have seamless mobile transactions, highly responsive customer service and fast transaction times. While personal bank statements typically update in real time and can be viewed on a mobile device, reconciliation of work-based expenditures can take days, if not weeks to process. Procurement generates reams of paper invoices and purchasing orders. In contrast, personal mobile wallets pay, log receipts and reconcile on bank statements in the blink of an eye. It is therefore unsurprising that SMEs are left frustrated by the lack of innovation offered by banks and are demanding banks provide the same level of service and personalised experience we have become so used to in our personal lives.

Answering SME’s digital needs

Thanks to the apps and platforms on offer from consumer banks, SMEs now want the same digital capabilities they get as personal customers. According to a Fraedom survey, 95% of commercial clients who bank digitally in their personal lives, expect to do so at work as well.

Fraedom’s own research found that the digital services which SMEs value most include real-time accessibility, access to online and mobile banking, fast turnaround specifically relating to problem rectification, credit applications, account balance and fee enquiries. However, just 43% of SMEs claim to have near real-time control over business spend. Almost a third of respondents feel they have very little visibility on a day-to-day basis and nearly a quarter confessing to having to regularly spend significant time and money investigating who spent what. Furthermore, over half of UK respondents said that on average they were personally spending more than two hours a week on expense or financial management tasks.

The need to regularly go back and interrogate audit trails can be a further drag on a business’ efficiency and productivity. That’s especially the case because senior people are often left to do much of this administrative work themselves. Banks must, therefore, address this clear disparity between what SMEs need and what is being provided in order to give SMEs the tools needed to give SMEs the real-time view of spending they require.


A lack of engagement

Just 12% of UK SMEs polled in the Fraedom survey said they thought that banks their organisation had dealt with over the past year fully understood their needs as a business. This is a worrying figure, suggesting something of a breakdown in the engagement process between banks and SMEs. SMEs should be seeing banks as an enabler of agility rather than a potential stumbling block.

Banks must not only work to understand the needs of SMEs but must also learn to speak the same language as their SME customers. If banks fail to communicate effectively and offer the service and products needed by these customers, they stand to lose out on a highly lucrative market.

The 2018 FIS Performance Against Customer Expectations (PACE) report outlines that the vast majority of UK SMEs (over 40%) prefer to contact their bank using digital methods (online, tablet, mobile).

With the way in which we communicate in our personal lives now being heavily reliant on digital methods, it should come as little surprise that businesses now desire the same.

What will the future hold?

As banks begin to answer this demand for a more personal service, we will begin to see more and more banks partnering with fintechs. Quite often, fintechs are best placed to help banks better understand the consumerisation of business processes and technologies today; the eagerness of SMEs to adopt these to achieve enhanced agility; and the frustration they feel if they sense that banks are effectively not speaking their language.

Fintechs can also play a key role in working with banks to help streamline the often bureaucratic and time-consuming spend management process within SMEs through the supply and delivery of innovative commercial card technology. This technology helps SMEs achieve greater insight into their spending and exert tighter control over it that so many SMEs require.

For banks, these partnerships, and generally offering SMEs the levels of service they are demanding, will enable them to build lasting, more trust-based relationships with SME customers while SMEs achieve streamlined efficiencies and greater business agility.


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Jun 22, 2021

TrueLayer launches new verification API

3 min
TrueLayer says the new Open Banking solution streamlines the onboarding process and simplifies payment processes

TrueLayer, the leading, London-based open banking solution fintech, has announced the launch of its new Open Banking API verification solution. 

According to reports, the technology combines open banking with machine learning (ML) to make the onboarding process seamless and fast.

Fast processing in Open Banking

Results show its success rate is currently 20% higher than credit bureaus because it generates reports in seconds rather than the traditional manual, bank statement checks that can take days to complete. 

TrueLayer also says the technology simplifies the payment setup and transactions by pre-verifying customer’s details. 

Another advantage is that existing providers have access to raw data that requires businesses to build and maintain their own logic to verify that the customer’s name matches their name on file at the bank.

The verification logic sits on top of open banking rails and matches the name given via the onboarding, along with the name held at the bank. It, therefore, offers a single feed that provides an immediate and highly accurate response regarding whether their user’s account has been verified.

Open Banking in the UK

Open Banking has seen a surge in popularity since March 2020. Data shows that the technology is being used 12-fold more than it was two years ago.  Banks in the UK are now handling more open banking payments volume in a single month than the amounts measured in the whole of 2019.

TrueLayer says many of its clients are using the Verification API, including Authologic, a Y Combinator-backed provider of identity verification solutions.

Ossama Soliman, Chief Product Officer at TrueLayer, said the verification breakthrough makes a huge difference to both businesses and customers because verification is the first step to onboarding a new user and yet it can often take days to verify an account owner using traditional methods. 

He explained, “Their security is questionable, they’re prone to errors and they take forever. It doesn’t need to be that way. With the verification API, we’ve built on top of open banking to create a faster, more secure, and more accurate approach to verifying a user’s account. It serves businesses across multiple industries, including financial services, PSPs, wealth management and trading, marketplaces, property, and iGaming.”

Speaking about the new technology, Jarek Sygitowicz, co-founder of Authologic explained, “Whether you are a fintech, a marketplace, or an ecommerce platform you want to deliver the best possible onboarding experience. 

He added; “We are aggregating different identity verification methods and we are big supporters of using open banking thanks to its ability to make the entire process more intuitive.”

The TrueLayer verification API delivers: 

• A faster onboarding process, cutting time from three days to three clicks.

• The API coverage spans all major banks, resulting in a 22.5% higher success rate compared to other credit check methods.

• Prevents fraud through its embedded strong customer authentication (SCA) within the bank verification process.

• Offers a better user experience for customers using biometric technology to confirm identity and ownership.

• Lowers payment failures through its pre-verified account details.

• Lowers burden on compliance teams through automated verification via a single API call.

• Lowers maintenance issues because engineers can focus on solving core business problems, rather than building and maintaining name-check logic.

Image credit: TrueLayer offices from TrueLayer

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