Why banks are missing an opportunity to capture the lucrative small and medium enterprise market

Henry Pooley
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Henry Pooley: Chief Commercial Officer, Fraedom fraedom.com, Visa Europe Limited, 1 Sheldon Square, Paddington, London, W2 6TT, UK

Journal of Payments Strategy & Systems, 2019, vol. 13, issue 4, 337-351

Abstract: This paper provides insight into the current small and medium enterprise (SME) and banking landscapes, exploring the challenges both face, and the strained relationship between the two, before advising on methods through which this relationship could be improved. The paper goes on to explore how FinTech firms could play an instrumental role in the evolving relationships between banks and SMEs, and then outlines four routes that banks could explore to take advantage of this highly lucrative market sector: invest in their own FinTech; develop their own technology; partner with FinTechs; or build an open banking ecosystem. The paper concludes that banks tend to take a pragmatic approach to problem-solving so are likely to use a combination of the proposed solutions and enlist the help of multiple providers. In this way, banks will be able to capitalise on the opportunities associated with SMEs and keep up with the rapid pace of change within both the banking industry and society as a whole.

Keywords: small and medium enterprises; SMEs; FinTech; banking; payments (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2019:v:13:i:4:p:337-351

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