As part of our recent research into the challenges faced by SMEs, Banking Circle interviewed industry experts to gain insight into the financial services ecosystem across Europe, and to discover what banks can do to help level the playing field.

SMEs are facing cash flow challenges

Working only with banks, SMEs often find themselves unable to get the advice or solutions they need to manage cash flow problems. FinTech has brought attention to these issues, however, banks now need to take action by offering SMEs more support and better financial products.

David Selves, CEO of the Selves Group highlights how the shift away from a cash-based society is creating new cash flow issues for SMEs due to the time it takes for funds to clear, holding them back when then need to pay for vital supplies.

Online merchants want to make buying and selling as frictionless as possible

Vidar Thorkelsson, CEO, Valitor, explains why SME online merchants are not getting what they need from banks, especially when it comes to expansion into new territories.

Online merchants want to make buying and selling as simple as possible. Yet there are many barriers to overcome in order to achieve this. The onboarding process needs to be faster, and easier, and the cost and speed of cross border payments needs to improve. New partnerships forged between banks and FinTechs are beginning to make this possible but there is still a long way to go.

Online merchants need better access to instant financing

Corporates can access finance quickly, but smaller merchants continue to be excluded, despite the need for liquidity being high – often just so they can keep a business going. Having to wait two months or more to find out whether an application to borrow cash has been approved or declined is stifling growth and putting many SMEs at risk.

Kent Vorland, CEO of SmartTrade App, discusses why financial institutions should give merchants at least the option to utilise instant financing to help alleviate cash flow problems.

Could banks be doing more to serve the SME sector?

Paul Townsend, Non-Executive Director of Vitesse PSP explains why banks struggle to provide financial services to SMEs as they grow and their needs become more complex.

With the businesses that make up the sector being so varied, and each bringing their own challenges, banks are wary of taking on SME clients due to regulatory and revenue concerns.

New solutions that focus on niche offerings tailored to the sector are being offered by FinTechs, and banks are forging partnerships. However, they will still need to overcome their worries around compliance and revenue in order to collaborate with FinTechs to deliver effective solutions to SME clients.

More collaboration in the financial ecosystem is needed to support SMEs

Running an SME himself, Roger Vincent, CIO and General Manager UK of Trade Ledger is all too familiar with the challenges the sector faces. In particular, mid-sized companies passing £1m turnover sit between retail and corporate banking, and as a result, are a hugely underserved market.

All actors need to come together to ensure banking and financial services become more readily available to SMEs. This includes not only those in the financial services industry but also governments who can drive regulatory changes to further open up the financial ecosystem, enabling better opportunities for collaboration.

When it comes to scaling, SMEs are struggling to access finance

OakNorth was borne out of the problems experienced by its founders when looking for debt finance to scale from traditional banks. Valentina Kristensen, Director of Growth & Communications, discusses the challenges fast-growing SMEs face when trying to access lending when entering the next stage of growth.

Unlike traditional banks, FinTech lenders are able to be more flexible about lending against assets rather than property, which is crucial for SMEs in the growth stage. This is crucial for businesses who need access to finance quickly.

How is Banking Circle working with banks to support financial inclusion for SMEs?

Mishal Ruparel, General Manager, Banking Circle, outlines how the business is helping SMEs by providing its lending solutions to FinTechs and other regulated financial institutions.

Our research revealed that accessing capital is a major pain point for SMEs across Europe. Banking Circle identified that in order to best serve SMEs, traditional financial institutions and FinTechs have to stop competing with one another and instead start working together to develop more flexible lending solutions. This is why we launched SME lending products to provide small businesses with fast access to cash, with repayment options that track their success, rather than being fixed.

Banking Circle lending solutions are scalable. This means it does not discriminate by size, or industry, meaning any small business will be considered for a loan. Decisions are made quickly – typically within just 48 hours of receiving the application.

Download our banking insight paper ‘Circle of trust or out of the loop?’ or find out more about Banking Circle Lending-as-a-Service here.