The Small and Medium Enterprises (SME) segment contributes over USD 850 billion per year to the global banking industry, which is about one-fifth of total revenues.1 This segment is also expected to grow at 7-10 percent over the next five years. Unfortunately, this segment has traditionally been underserved by the banking sector, often due to the highly varied credit quality in their portfolios. As a result, SMEs feel that the traditional banking sector neglects their needs. Fintechs and tech giants are now increasingly stepping into the vacuum left by traditional banks with technology-enabled service models for SMEs. They are offering innovative offerings such as a comprehensive bundle that includes traditional banking products, invoice management, tax-related services, inventory management and payroll support. This gives SMEs easy-to-use services in one place, helping them focus more on their core business activities. As banks move to capture a larger share of the market in the face of increased competition, they cannot ignore the SME sector any longer.
