The small-and medium-sized enterprises (SMEs) landscape has been significantly altered over the last two years. Many businesses struggled, others adapted and innovated, and many new SMEs were born during the pandemic. Regardless of whether they thrived or neared failure, all of them are now counting on banks to help build for the future as the economy moves into recovery mode.  

Accenture surveyed over 300 Canadian SMEs in 20 industries to understand how the pandemic has affected their finances and their banking needs. For over 60% of SMEs, recovering from the pandemic is their main short-term focus. Banks that want to be seen as part of the solution to the challenges faced by SMEs will benefit from learning what’s foremost on their minds.  

The pandemic affected SMEs in vastly different ways: 50% saw sales decrease, while 41% saw them increase. One-quarter invested in new tech and one-quarter reduced their headcount.   

Provide access to cash  

Nearly half of all SMEs saw an increase in expenses (driven by the cost of goods, technology, and delivery and logistics) and said that managing immediate expenses was one of their top challenges. As government support programs wind down, these expenses could become harder to manage unless banks are willing to help with access to funding.  

During the pandemic, 29% of SMEs said, they were unable to access banking products due to ineligibility. Larger SMEs in particular had difficulty accessing long-term financing and financial advice. This trend was seen beyond Canada: Accenture surveyed over 1,300 SMEs globally for our report, Bank of the profitable SME base. According to that survey, SMEs are looking for lenders that are considerate of the COVID-19 context and forward-looking to what is required to help SMEs thrive. We found that 42% of SMEs believe that alternative providers can offer better service than traditional banks.   

Non-bank players are wasting no time stepping in to fill the gaps left by incumbent banks. For example, the e-commerce giant Shopify launched Shopify Capital, which provides loans ranging from $200 to $500,000 in Canada for its SME customers. By approving these loans within days and using future sales for repayment, it is providing a timely solution to protect and grow its own customer base.

Faced with increased expenses, more than half of SMEs made cost efficiency their key focus in 2021. Looking ahead, a similar number put the health of their cash flow at the top of their list of long-term goals.  

Key actions for banks:   

  • Design services and offerings that help SMEs (especially smaller ones) maintain competitiveness—such as short-term financing or supply chain management services.  
  • Evolve the credit adjudication approach from reliance on personal guarantees and security-backed facilities to a model that leverages third-party data sources, cash-flow data and micro-segmentation approaches for each deal. 
  • Leverage enhanced digital channels and adjudication techniques to target new segments within the SME population that have historically been underserved.   

Maintain trust while increasing convenience  

Although SMEs increasingly used digital applications, call centres and email to interact with banks during the pandemic, they indicated that the “most important” or “highly important” sources of advice for them were relationship managers (75%) and in-branch advisors (71%). This illustrates that personalized advice and one-on-one customer service are still very important to SME customers. Globally, 62% of SMEs we polled currently receive or would consider receiving access to remote advisory services, underlining the importance of personalized advice to SMEs.   

91% of SMEs maintained or increased their level of trust in their current banking providers.

The fact that advice from their bank remains so important for SMEs gives traditional banks an advantage over new, digital-led players that don’t have the branch infrastructure or established relationships that SMEs value. But that doesn’t mean these new competitors aren’t a threat. While 79% of SMEs trust their incumbent bank “a lot,” that number now sits at 59% for online payment and ecommerce companies (e.g., Square and Shopify). Nearly half of SMEs (49%) would consider going to a non-bank provider for value-added services. The trust gap is likely to keep narrowing over the next few years.  

Meanwhile, 25% of SMEs said a material pain point of working with their banking providers was the inability to access products or services because their providers lacked capabilities via digital channels or did not offer convenient locations. More alarmingly, 44% said they were “likely” or “very likely” to switch their primary banking relationship to a non-bank provider.  

Key actions for banks:  

  • Leveraging new cloud-based technologies, embed the same capabilities across assisted and self-serve channels to ensure a more consistent and frictionless experience for customers.  
  • Empower advisors with the right data, insights and tooling to anticipate and identify customer needs and develop trust-based relationships, mirroring the practices of leading global banks.  
  • Expand partnerships in the financial services ecosystem to enhance digital offerings with value-added services like business insights for SME customers. 

Focus on recovery and resilience  

SMEs are focused on emerging from the pandemic into a more stable future. They are looking to partner with banks that offer them high-quality services and experiences with fast resolution of their problems, access to the products they need, reasonable and transparent rates and fees, and the convenience of either talking to a live advisor or taking care of their needs remotely through easy-to-use digital channels. As banks experienced lower than expected credit losses throughout the pandemic, they can address these evolving client needs from a position of strength.    

During the pandemic, more Canadian SMEs have expanded into digital sales, added technology to enable their employees to work remotely and fast-tracked their other digitalization plans. This has created a significant opportunity for banks to enable SMEs’ ambitions for growth during the recovery period with new services and offerings that improve the return on investment in these new systems.   

 Key actions for banks:  

  • Increase the personalization of credit decisions and product recommendations, especially as SME business models have changed and new ones have been born. 
  • Provide insights and analytics for digital transactions and end-customer preferences, along with ecommerce and point-of-sale solutions. 
  • Offer trade and receivables financing and guarantees as more SMEs begin to sell internationally. 

Most SMEs have recognized that the recovery will not be simply a return to “business as usual.” Instead, it will be the start of a new journey, and they will be counting on banks to be heading in the same direction. Banks that support the new SME journey will be able to maintain strong relationships based on trust and evolve along with their customers, while experiencing profitable growth.  

To find out more about the changing expectations of Canada’s SMEs and how your bank can meet them, contact me here 

For the global picture, read the full Bank of the profitable SME base report on the Accenture website.
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