Are SMEs swapping banks for FinTechs?


A recent report published by Capgemini has found that 89% of SMEs feel underserved by their banks and are considering moving to a FinTech challenger. 

The World Payments Report include opinions from 125 senior executives of leading banks and covered insights from over 17 global markets.

The study found that new payment methods are expected to increase from around 17% of total non-cash transactions in 2021 to around 24% by 2026.

According to Capgemini, despite promising post-pandemic recovery levels, the report found SMBs are continuing to struggle with cash flow issues and conversion cycles, stunting the next phase of growth for many. This has led to rising demands for payment service providers to step and realign their priorities to help SMBs explore new market opportunities.

The report also found that more than a quarter of banks struggle with monolithic and inflexible infrastructures, with 75% of the executives prioritising costs towards keeping current systems running over innovating new value propositions.

Capgemini said that payment firms should ‘embrace composability’ that lets them select and assemble building blocks in various combinations to satisfy customer requirements. From this, companies can configure their offerings to best align with SME needs.

A key technology being adopted by banks is distributed ledger technology, which is emerging as a big advantage for thriving in the modern day. The study found that 64% of SMBs believe DLT could emerge as a viable complimentary option to existing payment networks, as B2B cross-border transactions on the blockchain continue to grow alongside cryptocurrency transactions.

In addition, the rapid rise of more unregulated crypto assets has led many banks to explore the opportunities deriving from central bank digital currency (CBDC). The report highlighted that those looking to become industry frontrunners are already scaling DLT use cases for the next wave of growth opportunities.

Capgemini global head of payments and cards Jeroen Hölscher said, “Small and medium businesses are the backbone of global economic growth, contributing to half of global GDP and global employment. And yet, they are some of the most affected by the recent market volatility. Banks and payment service providers must realign their priorities to capture this untapped value through innovative and experiential payment services.”

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