Elevating SME banking beyond boundaries: Empowering SMEs with value-added services and personalization

in partnership with


Logo of VeriPark

VeriPark is a global solutions provider enabling financial institutions to become digital leaders with its Intelligent...

View more
SME Banking
22/11/2023 Study
profile picture of Susan Davies

Susan Davies

Santander UK

Head of Business Banking


At Santander, we recognize the profound impact that SMEs have on the economic fabric of our communities and regions. They are not just job creators, but also foster innovation, competition and regional development, shaping our lives in immeasurable ways. With that in mind, we are dedicated to ensuring these businesses beat the odds of failure. 

Our dedication goes beyond conventional banking practices: Through our ‘Beyond Banking’ initiatives, we provide the tools, resources and guidance needed to navigate challenges and seize new opportunities.  

Ultimately, by fostering a culture of continuous learning, collaboration and innovation, we aspire to help SME businesses not just survive but truly thrive in the ever-evolving business landscape. 

The strategic case for fundamental change

“In my opinion, one of the most challenging dimensions to master is the Value Proposition – as this happens to be the core reason why an SME client approaches the bank to start with, their need for a product or service to further their business. Banks must focus on this dimension and innovate continuously to keep ahead of the competition. The creation and growth of ‘SME product factories’ within banks, is a given.” 

Zubair Ahmed, Managing Director for the Middle East and Africa regions at VeriPark

It would be an understatement to say it’s been a turbulent time for both SMEs and their banks. First came the pandemic, then inflation, followed quickly by a global cost-of-living crisis, a rise in energy prices and growing political unrest. At the same time, banks face the ever-growing challenges of disintermediation, commoditization, and continuously changing consumer behaviors. 

Delivering a high level of service to SMEs against this backdrop while still turning a profit has been a balancing act that too many traditional banks – many of which are shackled by legacy technologies and decades-old processes – have failed to get right. 

While SMEs account for around 99% of firms and 70% of all jobs in OECD countries, contributing more than 50% of GDP in high-income countries worldwide, most commercial banks (56%) get less than 25% of their revenues from SMEs. In fact, joint research from Qorus and VeriPark published earlier this year found that only 5% of banks say that SMEs contribute more than 50% of their revenues. 

The result? SMEs feel let down and massively underserved. 

Fundamental change is needed. To gain a competitive advantage, banks must not only take the time to consider what SMEs want and need but also deliver personalized and value-added solutions that meet those requirements. 

What do SMEs want? 

Even before Covid-19, SMEs were open to receiving additional services from their bank. A survey by ING found that SMEs would be interested in help with webshop development (78%), website creation (73%), car leasing (52%), telecommunicatons (51%), printing services (49%) and legal services (21%) via their bank. 

Since the pandemic, however, the desire for value-added services has increased exponentially. SMEs are more aware of their vulnerabilities and, therefore, there is a strong demand globally for more traditional insurance as well as additional cover to help address reputational risk. There’s also interest in engaging with non-traditional insurance distributors, with bancassurance solutions taking the limelight. 

That’s not all. As SME leaders face daily struggles around talent acquisition, supply chain management and more, they are increasingly on the hunt for more advisory services. Banks must come to terms with this – and fast, especially if they want to avoid the growing disintermediation from challenger banks and fintechs who are already stepping in with exciting new service models. 

They need to recognize that the traditional approach to segmentation – based on the financial performance of an SME, for example – needs to be turned on its head. Instead, banks should segment their SME clients based on their current maturity stage – whether they’re in the early days when they might need assistance with marketing, for example, or at a later stage when they may need HR support, for instance. 

Ultimately, it’s clear that the status quo is no longer enough. There’s now a fantastic opportunity to serve SMEs better, but it requires a shift away from the siloed product-centric mentality of old. Instead, banks must adopt a client-centric approach that not only aligns with the lifecycle of the individual SME but also prioritizes speed to market as much as the quality of the services provided. 

For banks wishing to advance their value proposition for SMEs, pointed guidance in the five levels of maturity model can be used. This would help banks self-assess their current capabilities and enable them to envision their next leap in improvement.

Key principles for moving beyond banking

Pioneering banks are delivering personalized services by building ecosystems that go beyond banking. They are doing this in one of four ways: 

By participating: These financial institutions provide banking services to at-scale competitors that are building ecosystems. This strategy can bring in revenue by reaping spillover benefits as banks add new customers from other business systems. While this role grants the lowest financial opportunity overall, it helps banks monetize their product portfolios with minimal additional investments.
Example: GoBank partnered with Uber to enable drivers to get paid on demand. Instead of waiting four days to receive their fare, the ‘Instant Pay’ solution allows drivers to have their earnings sent to their account instantly. 

By Orchestrating: Banks can also become the primary integrators of partnerships and thus reduce the scale of investment and complexity of execution. In this case, the bank becomes the primary provider of financial services.
Example: Mashreq Bank wants to become the UAE’s most connected bank. To this end, it is building relevant and strong collaborations with key strategic partners with the goal to support the SME ecosystem within the region and beyond. It has forged partnerships with Microsoft, Amazon Web Services, Lexyom, Mine Cloud Tribe, and more. 

By building: In this instance, banks build their own ecosystem. This role provides the most significant financial and non-financial benefits; however, it is also the hardest to pull off. 
Example: Royal Bank of Canada has introduced an end-to-end online platform called Ownr, which helps with tasks such as registering an SME business, building a logo and brand, and bringing together information from marketing campaigns, website traffic, and sales activity to get a better understanding of the business.

By incubating: In this instance, banks develop an incubation environment for various fintechs to come together and produce new innovations to advance their value propositions for SME banks. 
Example: A large bank in Turkiye has attained a high level of maturity in this regard. By creating an incubation environment, it has provided its SME clients with collated solutions in a packaged and integrated form. The environment has multifaceted roles, functioning not only as a primary customer acquisition tool but also as a powerful marketing and sales tool, while concurrently serving as a loyalty program. Its transformative impact on SME profitability is notable.

The best examples of financial services organizations moving beyond banking have a clear point of differentiation on which they focus their value proposition. It’s important to realize that banks cannot serve all SME customers in the same way – they need to prioritize either the segment or the approach and build a strategy from there. 

By participating in beyond banking ecosystems, banks can monetize their product portfolio with minimal investment but with a low financial opportunity since they must share their profits. Building an ecosystem from scratch offers the most potential, but it’s undoubtedly the riskiest approach – and the trickiest to get right. 

Effective partnerships are crucial to all these approaches. 

How to build an effective partnership

It is imperative to find the right partner. Identifying and choosing a partner that fits strategically with your bank will determine whether the new venture succeeds or fails. How do you know if a partner is the right choice? It boils down to an alignment of vision. If you are looking for a company to deliver a digital, AI-powered payroll solution, there are certainly many on the market that may offer a viable solution. 

But not every company will share your vision on the project. Some may have a different management style and approach. Some may be willing to cede control and accommodate lots of external input. Others may insist on their pre-configured, out-of-the-box solution. You must clearly set out your vision for the project and then identify which partner has both the capability to deliver and aligns nicely with the strategic vision in a cohesive way. The criteria will be project-specific, but having a clear understanding of your needs and vision is crucial before setting out in search of the right partner. Similar cultures can be helpful. Start small, build and learn.

One of the most crucial elements of building an effective partner is defining roles appropriately. A partnership involves working with new people and teams. Clearly defined roles and responsibilities are key to cultivating a successful partnership. Who is going to take the lead and in what area? Who will oversee the relationship? Who is in charge of what deliverables? Where will the data be stored and managed and by whom? These are important matters that must be agreed upon by management in order to avoid misunderstandings further down the line.  

With roles clearly defined, it is time to bring your solution to the market. This involves the usual steps associated with product rollout: customer identification; customer outreach; a solid marketing plan; getting the timing right; pushing the product through the right channels; following up and managing the customer relationship. If executed correctly, the product rollout can set the foundations for a long and prosperous partnership.

Don’t forget, though, that for banks looking to compete with a beyond banking platform, partnerships are only the first step. Orchestrating or building a thriving ecosystem requires banks to rethink their value proposition and create an operating model that challenges the norm. 

Five tips for success

When building a beyond banking ecosystem, there are five ways banks can ensure their project is more likely to succeed. These are: 

1.     Focus on SMEs’ most significant challenges 
By centering your offering around what’s pivotal to an SME’s success, you are more likely to add value to their business. 

2.     Start with minimal viable product and scale rapidly
Test your MVP on a small segment of SMEs. Incorporate feedback and then scale to reduce risk but increase speed to market. 

3.     Make critical IT choices early 
Think through IT implications from the outset to avoid challenges later. 

4.     Think early about monetization
Think about whether you will earn money via subscription fees, commissions, or data monetization or whether you will simply absorb costs with the hope of building long-term loyalty. 

5.     Build a separate digital organization 
To ensure you remain agile in the long term, try not to build your ecosystem on incumbent or siloed legacy systems.

Best practice examples of banks delivering value-added services

Here’s our roundup of some of the best in-practice examples of banks succeeding in delivering services that go beyond banking: 

Alliance Bank Malaysia
Alliance Bank has developed a community-based business-to-business portal called BizSmart to enable SMEs get more sales and reduce daily operating costs. 

Union Bank of the Philippines
Via BizStarter, UnionBank has become the first Philippine bank to introduce digital account opening for SMEs. 

Starling Bank
Through its new Bills Manager feature, Starling enables SMEs to set money aside for a particular purpose, such as rent for their shop.

RBC is focused on not only accelerating its SME customers‘ digital transformation, but also scaling innovative ventures on its clients‘ paths and offering a range of digital tools tailored to different industries. 

The CommBank app helps SMEs run their business on the go, stay on top of cash flow and access actionable data insights through the Daily IQ dashboard. When SMEs are ready to grow, CommBank provides a range of digital tools including DailyIQ to equip SMEs to identify expansion opportunities. 

Bradesco’s MEI Account brings together financial and non-financial solutions into an exclusive portal tailored to the needs of Brazilian individual micro-entrepreneurs.

Nedbank offers tailored solutions for selected industries including manufacturing and agriculture. Its aim is to entrench itself with its clients through holistic end-to-end solutions that support business objectives and to facilitate growth opportunities.

CASE STUDY: How Santander is going beyond banking

Susan Davies, Head of business banking at Santander UK, recognizes that her SME customers want and need far more than just financial support. “Businesses have changed, consumers have changed, and the world has changed,” she says. “We’ve had to adapt and evolve with them. Our success today is rooted in the idea of understanding what our customers want and then building strong partnerships to meet those needs.”

With this in mind, Santander has created a wide range of support and content that goes beyond banking. 

This support includes: 

  • An energy-switching service
    In the midst of the current cost-of-living crisis, for example, the bank has partnered with Bionic to help SMEs get a better deal on their energy rates. 
  • Personalized content 
    Via its ‘Breakthrough’ page, Santander provides colleagues and customers with relevant SME support and content that has been designed for discoverability, ensuring SMEs can access the support they are looking for. 
  • Education and development
    By working with multiple learning partners, Santander supports the growth of business owners and their teams through various development programs.
  • Business support collaboration
    To inform and empower business owners to access the right help at the right time, Santander uses its ‘Breakthrough’ page to highlight trusted sources of non-financial support. This includes Strive UK, an initiative of the Mastercard Centre for Inclusive Growth, which is delivering free digital tools, training and mentoring, as well as Help to Grow, a £520 million UK government scheme to help owners of SMEs take their business to the next level.
  • Mentoring for women
    Since 2018, Santander has partnered with Moving Ahead, a social impact company looking to improve workplace inclusion and diversity. Together, the two organizations are delivering traditional mentoring and a range of additional support and services, all designed to help women excel in the workplace.
  • Support for ethnic minority businesses
    Working alongside UpSkill Digital, a company creating inclusive and equitable learning programs, Santander is providing financial readiness support tools and additional free funding workshops for ethnic minority businesses.
  • SME Support Toolkit
    Launched in September 2022, Santander’s SME Support Toolkit meets the needs of customers in its Commercial Clients portfolio with targeted non-financial support addressing the rising costs and challenges of doing business.

The new offering has not gone unnoticed. For the third time in six years, Euromoney has named Santander ‘the best bank in the world for SMEs’ by Euromoney – an accolade that it is incredibly proud of. By embracing the opportunity for relationship-forging that is presented in the SME segment, Santander is positioning itself for success long into the future. 

Final thoughts

There is a real opportunity for banks and financial services firms to stay ahead of rapidly growing competition. To do this, they must disrupt themselves and provide support for SMEs through a seamless digital experience and delivery of timely access to credit. Banks can also drive new revenue streams by addressing the changing needs of SMEs. This can be achieved by transforming their own business models, embracing digital ecosystems, optimizing relationship management models and the opportunity of embedded finance. Internalizing and understanding the five maturity levels of SME Banking and building an actionable roadmap is a critical step in that journey.

The Five Maturity Levels of SME Banking report was published in June 2023 and, since then, both Qorus and VeriPark have noticed much adulation within the banks focused on SMEs. Several banks have used it already to self-assess their current maturity and are now advancing their internal strategies to aim for higher maturity. 

Are you ready to do the same? Learn more about how you can revolutionize your approach to the SME segment and multiply your customer base? Download The Five Maturity Levels of SME Banking report. 


profile picture of Zubair Ahmed

Zubair Ahmed


Managing Director, MEA

profile picture of Susan Davies

Susan Davies

Santander UK

Head of Business Banking

profile picture of Lukas Dzuroska

Lukas Dzuroska


Head of Communities

Related news & insights

SME Banking
29/02/2024 Video

SME banking outlook 2024: A state of the union for growth and resilience

Alexander Verhagen and Sasha Brainis at McKinsey demonstrate that banks globally achieved their best results in a decade during 2022-23....

SME Banking
28/02/2024 News

Klarpay introduces tailored entrepreneur accounts

Klarpay has unveiled its latest financial offering: Entrepreneur Accounts, designed specifically for Business Founders, UBOs, and Senior Management members already...

Digital Reinvention
27/02/2024 Article

TMBThanachart Bank enhances data infrastructure with all-flash solution

Following the merger, TMBThanachart Bank sought a high-performance storage solution to manage expanding data volumes efficiently. Huawei, a new IT...

SME Banking
26/02/2024 News

Ozan teams up with Fingate.io to offer instant shopping loans

Ozan Electronic Money Institution (EMI) has partnered with Fingate.io to introduce "Ozan Kolay Kredi" (Easy Loans), an innovative product aimed...

SME Banking
23/02/2024 News

Griffin launches Foundations: BaaS integration for UK companies

Griffin, a leading UK bank and Banking as a Service (BaaS) platform, has introduced Foundations, an early access program tailored...

Digital Reinvention
22/02/2024 Article

Banking on the Cloud: 7 major banking trends for 2024

The 2024 Banking on the Cloud report combines insight from analyst firms and global consultancies with knowledge gained by working...

Digital Reinvention
20/02/2024 Article

Halyk Bank's digital upgrade: Elevating customer experience with advanced storage solutions

As digital demand surged, Halyk's storage infrastructure faced strain. Legacy systems struggled to cope with increased traffic and transaction volumes,...

19/02/2024 News

MicroBank's social impact financing soars in 2023

MicroBank, the social banking arm of CaixaBank, experienced a significant surge in its social impact financing in 2023, with a...