ARMONK,
N.Y., Sept. 18, 2024 /PRNewswire/ -- New
findings from IBM's (NYSE: IBM) Institute for Business Value and
the Banking Industry Architecture Network (BIAN), with
contributions from the SME Finance Forum managed by the
International Finance Corporation (IFC), revealed that despite the
significant role small to medium-sized enterprise (SME) plays in
the global economy, banks may be missing an opportunity to foster
growth in this market due to their focus on reducing risks, meeting
regulatory requirements, and the substantial costs of serving this
highly diverse client segment.
The Banking for Small and Medium Enterprises: Serving the World
Economy with Data and AI report shares insights and analysis
resulting from a global survey of SME business owners and managers
with 50 or more employees, senior banking executives and fintech
leaders.
Small to medium sized enterprises represent 90% of all
businesses, 70% of the workforce, and 50% of gross domestic product
(GDP) worldwide1. Given this market segment's role in
the global economy, the opportunity for banks and other financial
institutions to have a positive impact is significant. Yet banks
and SME business leaders diverge in their views on prioritization
of services signaling a largely untapped opportunity for nimble
financial institutions to exploit.
"The disconnect between what small and midsized business leaders
say they need in order to grow and the services most banks
currently offer to this customer segment is profound," said Shanker
Ramamurthy, Global Managing Partner Banking & Financial
Markets, IBM Consulting. "The good news is that emerging
technologies such as generative AI, in combination with automation
and a robust data strategy, puts the potential for financial
institutions to play a much more impactful role in the growth of
this important client segment well within reach."
The ability to build, integrate and scale a technology
environment flexible enough to meet the needs of a dynamic
marketplace is paramount.
"While banks around the world increasingly rely on the cost
effectiveness of cloud for their high-volume transactions, they
retain their core functions and most sensitive data on premises,"
said John Duigenan, General Manager Global Financial Services
Industry, IBM Technology. "A robust hybrid cloud strategy
allows institutions to fully leverage the power of generative AI
for informed insights into the behaviors of customers and their
anticipated needs while ensuring the highest levels of privacy,
security and resilience."
To better meet the needs of clients in all business domains, it
is critical for financial services organizations to adopt a
technology development methodology that enables organization-wide
acceleration.
"As financial institutions grapple with how to best serve their
various client segments, it's clear that a rational, standardized
approach to technology architecture lays the groundwork for
substantial efficiencies and future innovation," said Steve Van Wyk, Chairman, Banking Industry
Architecture Network. "By adopting proven industry standards, banks
lay the essential groundwork to improve their competitiveness."
Key Findings
- Less than 6% of bank executives surveyed graded the quality of
their institutions SME banking services with an "A". Nearly
half (47%) gave themselves a "C".
- SMEs expected an understanding of their unique business needs,
tailored solutions and networking opportunities while banks
prioritized apps, dedicated relationship managers and branch
proximity.
- SMEs cited help with compliance and legal requirements and
sustainability decisions and reporting as their two top needs while
banks are prioritizing assistance with fraud
monitoring in transactions and insurance for unforeseen
events.
- Bank executives surveyed largely recognized the value of
technology architecture standards with 64% citing the ability to
build faster, 64% noting a reduction in development and maintenance
costs, and 60% prizing the ability to integrate faster.
Recommendations
- Financial institutions should explore investments in ecosystem
platforms and partners that will allow them to play a valuable role
in creating opportunities for their SME clients to grow
through digital innovation.
- An enterprise-wide approach to scaling emerging technologies,
versus tactical applications, is the best practice strategy for
optimizing the benefits of generative AI, automation and data and
ensures that the advantages extend to all business lines and
customer segments.
- Banks should embrace emerging technologies, such as generative
AI and automation, to achieve greater efficiencies in compliance,
risk and operations and redirect resources to enhance their SME
client offerings.
For the full report, visit
www.ibm.com/thought-leadership/institute-business-value/en-us/report/small-medium-enterprises-banking.
IBM is a leading provider of enterprise AI, hybrid cloud
architecture, security and ESG insights to the global financial
services sector. Its deep industry expertise, extensive portfolio
of services and solutions, and its robust ecosystem of fintech
partners, empower collaboration, innovation, and creation with
clients. As a trusted partner to banks, insurers, capital markets
and payments providers, IBM guides financial institutions on all
stages of their digital transformation journeys through IBM
Consulting and delivers the proven infrastructure, software, and
services they need through IBM Technology. For more information,
visit www.ibm.com/industries/banking-financial-markets.
Methodology
The IBM Institute for Business Value surveyed more than 1,000
SME owners and managers with 50 or more employees equally
distributed across nine countries to explore their banking needs
and how they are adapting to the progressive availability of
digital services. Nearly 700 banking executives across 25 countries
were surveyed to understand how their institutions are competing in
SME banking. Additionally, one-on-one interviews were conducted
with executives from financial institutions and fintechs to gain
further insights. Data collection for the study occurred June
through August 2024.
The IBM Institute for Business Value, IBM's thought leadership
think tank, combines global research and performance data with
expertise from industry thinkers and leading academics to deliver
insights that make business leaders smarter. For more world-class
thought leadership, visit www.ibm.com/ibv.
About IBM
IBM is a leading provider of global hybrid
cloud and AI, and consulting expertise. We help clients in more
than 175 countries capitalize on insights from their data,
streamline business processes, reduce costs and gain the
competitive edge in their industries. Thousands of governments and
corporate entities in critical infrastructure areas such as
financial services, telecommunications and healthcare rely on IBM's
hybrid cloud platform and Red Hat OpenShift to affect their digital
transformations quickly, efficiently and securely. IBM's
breakthrough innovations in AI, quantum computing,
industry-specific cloud solutions and consulting deliver open and
flexible options to our clients. All of this is backed by IBM's
long-standing commitment to trust, transparency, responsibility,
inclusivity and service. Visit www.ibm.com for more
information.
1Financial Institutions Group (FIG) MSMEs.
International Finance Corporation (IFC).
https://www.ifc.org/content/dam/ifc/doc/2024/msme-s-factsheet-ifc-financial-institutions-group.pdf
Media Contact
Mary Ellen Higgins
IBM Global Financial Services Industry External Communications
maryellen.higgins@ibm.com
781.789.1911
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