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October 26, 2022
Segmenting SME banking customers
CREALOGIX Blog - Segmenting SME banking customers
Digital Banking
SME banking
CREALOGIX Yannick Decaumont
Yannick Decaumont
Managing Director Mediterranean & Middle East

Our recent research into SME banking requirements suggested that all SMEs value digital banking services and consider it an essential aspect of service provision. A closer look at what SMEs want from their banks suggested that SMEs of different sizes have different expectations and requirements. The size of the business is just the tip of the iceberg when it comes to customer segmentation. Digital banking is the ideal channel to deliver a truly personalised experience for SME customers, which in turn builds customer loyalty and boosts commercial growth. 

When it comes to SME banking, size matters 

As we covered in a previous blog, SMEs cover a wide range of businesses and their needs vary according to size. As a business grows, there is often greater complexity and this means that there may be a wider range of financial needs in terms of products and services. It makes sense to tailor the offering to the size of the business so that a complete offer doesn’t overwhelm a simple business with too many choices and that a larger business does not find the offering limited. 

Manufacturing versus services 

In a service business, the costs may be focussed on employees and overheads such as premises. In a manufacturing business there may be a greater number of costs relating to materials and components and these may vary more than in a service business. Some businesses may be a combination of the two – a restaurant provides a service that requires the purchase of food, for example. While all types of business would need to have a clear view of costs to estimate profit margins, a business that buys and stores materials may require more details or wish to see a view of costs over time, or costs per supplier. This valuable information adds value to the banking service and makes it an essential part of the financial function in a business, whatever the size and whatever the business. 

Real world versus online businesses 

A business that operates in the “real world” such a shop or a restaurant is more likely to handle cash. The ability to attribute any cash deposits to a specific day or project will ensure that the accounts are still clear. In contrast, a business that operates entirely online and uses electronic funds transfer and card payments may be more interested in services that integrate e-commerce functionality directly with the SME banking account. Some businesses may wish to have both options but again, it’s worth understanding the pattern and nature of transactions to provide the best services according to needs.  

Getting to know SME customers 

SMEs have historically been a relatively neglected segment by banks, but as the focus is placed on SMEs to grow economies throughout the world this is likely to change. Banks that embrace support for SMEs of all sizes are well-placed to gain new business and help some of those businesses to grow into even more profitable corporate clients. Neobanks are already working on some of the possibilities, such as specialist accounts for freelance workers and social media influencers, but traditional banks are well placed to expand this principle to SMEs. From e-commerce to currency services for importers and exporters, personalisation will ensure that banks get the service that they want. Offering this through digital banking will make this a fully scalable option, delivering convenience to SME customers and commercial growth to banks. 

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