With the continued focus and investment into SME banking, the never-ending flow of new digital banks and established players launching their own “challenger” offerings, we believe that to compete, win market share and actually meet some of the broader needs of small businesses during these times it will take more than just a slick mobile app, a trendy branded card and some marketing.
What’s equally, if not more, important is to have a proposition that drives real value to SMEs (helping free up time through intelligent financial management features; providing tools that help SMEs run, optimise and grow their business; etc.) whilst also providing a clear path to sustainable profitability. The sooner the offering becomes self-sufficient and provides options to reinvest in new products and features, the better. Having a keen eye on the operational aspects and cost-to-serve (as opposed to just focussing on cost-to-acquire) will force choices to be made on the technology to be leveraged, the operational structure of the business and how focus is applied to value creation.
We’ve launched new digital banks and propositions aimed at SMEs across both challengers and incumbents. As different as these may seem, the common denominator is that all of this activity in the market has accelerated a “raising of the bar” and expectations from SMEs when it comes to digital services provided by their banks.
A lot of activity to date in this segment has been focused on launching similar digital propositions to address the long-standing pain-points SME businesses face. With government schemes supporting the majority of SME lending right now, the opportunity to differentiate and truly deliver value-adding services that support SMEs needs careful thought, robust planning and decisive action.
Like all major projects, the way these are set up and those first few steps on the journey will go a long way to determining the long-term success of the SME offering and how effective its impact on the market will be. Getting the product launched to market safely and at pace requires a unique approach, especially if the desire is to drive material change, innovation and competition in the market as quickly as possible.
Based on our experience working with a number of players in the SME financial services sector from concept through to execution, there are five key foundations that we believe make a difference, helping to deliver with more certainty and with the customer at the heart of everything.
1. The Value Case – there is more to it than just gaining investment approval; you must take time to deepen it, test it and ultimately, deliver it.
Input from your Strategy and Commercial team is fundamental to a seamless transition from strategy to execution. We see four critical roles the team will play in ensuring an effective mobilisation of your delivery efforts with a focus on deepening the value case; putting the right reporting and governance in place; supporting ad hoc analysis; and ensuring management and delivery stay aligned.
2. Be customer-centric throughout - don’t let your customer focus fade; pressure test your proposition with customers early.
Designing your proposition based on initial research will only get you so far. Before diving straight into execution, we believe it’s prudent to pre-qualify and test this proposition with your target customers, validate the research to date and align this with a more fine-grained view of your business case to ensure you can scale your customer numbers viably. The fun doesn’t stop there. As you continue to evolve your offering this approach must be taken iteratively to ensure you are meeting your customer's needs.
3. Not all decisions are equal. Taking time to establish the right architectural and technology design principles will pay dividends later down the line.
Making the important architectural and design decisions at the outset is key to providing clarity of vision and a stable foundation for successful delivery. Just as important as the solutions delivered are the principles and decisions you make which provide you with the opportunity to transform your technology and deliver incremental value beyond your immediate goals. Customer needs will continue to evolve and having the technical capability to continually pivot to meet those needs In both the short and long term will be fundamental to success.
4. It's not all about technology; think about your service model from the very beginning.
Being able to develop the capability to anticipate and address the needs of your customers before they ask is becoming the norm. An adaptable model is crucial to allow an organisation to flex its servicing in line with customer demand and deliver improvements to market promptly, driven by leading-edge analytics and meaningful insight to customer behaviour and demands.
5. Culture and controls are critical. Set yourself up for success from the start.
Establishing the right culture for change with the right programme management support will ensure an expedient mobilisation and delivery at pace, while appropriately managing risk. It would be prudent to consider incubating this initiative away from the rest of the business to truly adopt the target ‘start-up’ culture that emphasises agility and customer-centricity.
In summary, now more than ever, driving the growth of small businesses and supporting the economy is how you can make an impact that really matters. By considering the topics outlined above when delivering solutions to market you can operate more effectively and deliver value where it matters, and when it matters. Ultimately, whether your plans are to enter or continue delivering into the SME Banking market, providing the funding, advice and support to businesses in a way which is easily accessible and fair will be essential.