By Fiona Roach CanneryCo-founder and Chief Product & Marketing Office at Pollinate
The past two years have shown that small businesses are open to innovative ideas – they just need banks to provide them.
As consumers support local retailers more than ever to help them rebuild, there is a unique opportunity to support SMEs with services and marketplaces that allow them to grow.
The challenge is accelerating the pace of market change, amid intense competition from digital competitors vying for the attention of connected customers and businesses.
Global economic growth is expected to exceed $3 trillion this year, so digital competitors have engaged in a virtual arms race to maximize their share of potential gains from increased user numbers and increase in spending levels.
This is great news for consumers, who will be spoiled with great user experiences and rewarding service enhancements from app providers who are obsessed with improving their user interface to keep customers active and loyal. .
The potential rewards are significant. For example, Swedish fintech Klarna reported a 70% increase in the number of active consumers over the past year to 147 million, driven by demand for its Buy Now Pay Later product and a growing range of services within of its growing app-based ecosystem.
A key source of growth, in addition to financial innovation, is integrated marketing, through which individual brands are promoted to a community of consumers. Increases in customer spending are unlocked through more payment options, including physical cards, a “pay now” option and a growing rewards program.
Like competitors such as Afterpay, the importance of the market is evident the moment you visit their websites, with offers from retailers and merchants dominating digital real estate.
In this environment, the gap between what consumers and businesses can receive from a bank and what traditional banks can offer will continue to widen.
Banks must avoid being pigeonholed into the restrictive role of providing savings or loans by ensuring they are seen as central to the digital revolution. Fintech’s disruptive efforts are raising the competitive bar, so banks must respond.
A key area of future competitive pressure will be the SME sector, which accounts for 90% of businesses globally but generally remains an underserved sector of the economy.
Banks can still win in this space – they have all the assets to do so, but they will have to act quickly.
The small business market is potentially extremely lucrative for banks. SMEs actively seek out innovative products and services available on the market – and there can be a lot more to a relationship with a merchant bank.
The answer lies in banks leveraging their strengths while delivering the experiences that consumers and SMBs increasingly expect.
Banks have access to unparalleled levels of business and consumer data that can inform and fuel innovative and valuable solutions, so SMEs can sell more, learn more and grow faster.
It is important to note that banks remain the only ones in the payment chain that can connect directly to both merchants and consumers.
Generate Data Insights
Banks can use their unique data insights to enable SMBs to “do business better” through products and platforms that offer a much deeper understanding of customers and their spending habits. This includes the potential for new digital marketplaces that connect customers to relevant products from local businesses they want to support, while enabling smaller merchants to reward loyalty and attract new customers.
Marketplaces can also be used to support SMEs, by providing them with a hub from which they can access a curated list of relevant and quality third-party services that improve business performance by integrating seamlessly. to their systems.
The goal is to delight SMEs with an “explosion of innovation”, delivering digital solutions that connect small businesses more closely to their customers and empower them with insights that drive growth.
Pollinate research shows that banks are ideally placed to support SMEs. Consumer trust in banks is more than twice that of technology companies when it comes to sharing transactional data; consumers would also trust their bank to run a loyalty program allowing them to provide tailored and personalized offers to consumers.
This customer-centric, data-driven approach will help banks combat the disruptive influence of fintechs, while providing valuable support to SMEs as they rebuild after years of economic disruption.
The power of partnerships
However, moving quickly has always been a challenge for large financial institutions, given the difficulties of updating legacy systems while maintaining service levels and security. Making changes in a timely and secure manner is no easy task, which means working with specialist partners is important to driving banking innovation.
Working in parallel with banks, smart partnerships can provide the expertise and speed of execution needed to respond to emerging opportunities and changing customer needs. This allows banks to leverage their strengths in compliance, data security and customer relationships, while agile partners provide the speed of innovation needed to respond quickly to customer and business demands.
In this way, the power of partnerships can take banks beyond the back-end to create new ecosystems where customers and businesses connect.
Innovative partners can be the catalyst that secures growth for SME customers and generates long-term loyalty to banks for decades to come.
About the Author:
Fiona Roach Canning is the co-founder and chief product and marketing officer at Pollinate. Fiona’s expertise lies in designing and managing consumer engagement programs. She ran operations and customer experience at Nectar, the UK’s largest loyalty program with 20 million members. She also led their white label business in Europe, managing exclusive programs for hotels, airlines, banks and retailers. Prior to Nectar, Fiona led insight for Visa Europe and was a manager at Prophet, a global marketing and brand consultancy.