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Digital Banking SMBs

Can Digital Banking Initiatives Deliver Better Banking for SMBs?

Vikram PriyadarshiVikram Priyadarshi
October 17, 2019

SMBs make up almost half of businesses across most industries and there are currently some 30 million small and medium-sized businesses just in the US alone. With such a large segment of businesses being represented, it’s understandable that services will look to cater their offerings to small and medium-sized companies.

Banking is one industry that is slowly coming around to this realization. However, SMBs have different banking needs than your typical enterprise and corporations.

Gupta said it eloquently when he mentioned that Citibank doesn’t look at small businesses as small customers. Instead, they are the local operations of the enterprises of tomorrow. With digital advancements, banks are hoping to deliver a better banking system for smaller businesses across the globe.

This was the topic of conversation at the latest Payoneer Forum held in India. Check out some valuable insights. Click below to see the full presentation.

Digital Banking is the Wave of the Future

No matter who you ask, the answer is the same – digital banking is the way all businesses will handle financial transactions going forward.

The process is not a simple one though. According to expert banker Vikas Dimri at Deutsche Bank, Indian banks and others across the world are going through the stages to transfer from traditional banking services to a digital platform. That process includes:

Digitizing Physical Manual Processes

The first stage of digitalization is taking basic manual processes and converting them over to a digital format. This includes your everyday transactions such as invoicing, making payments, and going paperless for your bills.

Re-engineer Processes

Next is reframing the traditional banking process into a digital platform. This is a more technical stage, but according to Sameer Gupta from Citibank, these steps are well underway already.

Create New Products

Probably the most exciting stage comes when banks start to develop new digital products to better enhance their customers’ experience. From working capital to invoicing and money transfers, banks are working tirelessly to revamp their platforms so that SMBs will have more efficient fintech solutions to their everyday and global problems.

Joining the Past with the Future

The goal of new digital banking initiatives is to make it simpler to manage banking. However, one of the hurdles that banks have to overcome when making the switch from traditional banking channels and procedures over to a digital platform is, ironically, the customers themselves.

Even in today’s technology-hungry society, people are still holding on tightly to the traditional banking format. Some people love their branch and some hate having to stand in line at one. Yet people are staunchly devoted to the idea of having a branch to call their own.

As such, many branch features are still not available online. According to Vikas Bhauwala of ICICI Bank in India, banks are currently working very hard to correct this discrepancy. As the digital revolution sweeps the nation, banks need to provide customers with the same level of service, personalization, and trust that traditional branch banking currently supplies. Luckily, digital banking is designed to do all that and more.

Big Benefits for the Digital Boom 

Adopting a digital platform for your banking is going to usher in several major benefits for small and medium-sized businesses. In addition to streamlining processes, making it easier for banks and customers to get things done, digitalization will afford businesses with the following benefits:

Personal Expertise Wherever You Are

Global marketplaces like Amazon are making international selling a more viable option even for smaller-sized businesses. Cross-border payments, local versus foreign taxes, compliance and foreign invoicing are all issues that the previous generation of SMBs didn’t have to deal with.

As our reach expands, so do our business complexities. According to Sameer Gupta though, this is one of the hurdles that digital banking is meant to overcome. These banks aim to be SMBs’ local expertise for banking in other countries. They intend to provide you with support within your local environment even when working overseas.

Presence Across the Globe

Taking things one step further, digital banking allows even smaller-sized businesses to extend their customer reach across the globe. While conventional banking is heavily based on documentation and local presence, a digitized platform eradicates those borders increasing revenue and growth for all businesses.

Instant Payments Even in Cross-Border Payments

To complete the global selling trifecta, digital banking provides a simple and affordable means of sending and accepting payments even across borders. Limitless possibilities are opened up by plugging into local (and faster) payment schemes for cross- border transfers. 

Paperless Transactions

The entire world is shifting towards paperless. From paperless bills to online application forms, everywhere you turn they’re doing away with wasteful paper transactions. Digital banking helps SMBs cut costs and time on documenting printing. That means things will move much faster both in the initial stages of a transaction and later on down the line since customers will not have to rely on someone manually.

More Transparency is Good for Everybody

With everything online, information is more readily available to banks. When a lender can see how your goods are moving from one place to another, time status of tracking, etc., banks are more confident to finance. When they can see the real numbers in real time (because the information is readily available), banks will be more willing to finance faster and more readily. It also means you can expect lower rates.

Working Capital/Financing Options

SMBs also have more access to working capital and other financing options. Banks can accept documents in digital form and use online applications for loans and other financial products. This enables a faster application process, faster underwriting process, and faster approval. What once took 45 days to two months for approval can now be had in ten to fifteen days.

With digital banking, you can send out bank statements, invoices, everything you need. Banks can process it all quickly since everything is readily available. The end result is faster access to credit/capital.

Customize Products for You

Finally, with digital access, banks are able to customize the products more appropriately. This is a more convenient option, but it is also more cost-effective since SMBs won’t have to pay for features/limits they don’t need.

Digital Banking: It’s Not a Question of If, But When

Digital banking has more tricks up its sleeve including machine learning, analytics, and digital invoicing. From shipping bills and transactions requests, to limits getting reassigned and more, everything can be done with a click of a button.

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