THE SMALL BUSINESS FINTECH REPORT: How fintechs are targeting small- and medium-sized businesses and pushing incumbents to fight back

BI Intelligence

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Fintechs have found a way to serve small- and medium-sized businesses (SMBs) while still making a profit, and now incumbents want in on the action.

SMBs have been historically underserved by financial services providers, but that’s starting to change as both fintechs and incumbents continue to roll out SMB-targeted services.

This report will look at the areas in which incumbents have failed SMBs when it comes to financial services provision — including credit, digital business services, and bank accounts — and give examples of where fintechs have successfully filled the gaps. It will also provide examples of incumbents that have introduced new SMB products in response, and our verdict on which type of supplier — fintech or incumbent — will dominate each area of the market for SMB-focused financial services products.

Here are some of the key takeaways:

• SMBs globally have been underserved by financial services providers because they make less revenue than large corporates, yet demand more advanced services than most consumers. As a result, they’ve developed a reputation among legacy financial institutions for being unprofitable to serve.
• Fintechs are now finding ways to serve even the smallest businesses, while still realistically expecting to turn a profit — and that’s changing the game in the SMB space.
• Fintechs are filling the gap in service provision to SMBs in three main areas: provision of credit, access to critical business services, and provision of bank accounts.
• Incumbent providers are fighting back with products of their own by partnering with fintechs or building in-house services. JPMorgan, Barclays, NatWest, and BBVA are just a few major banks leveraging new technology to better serve SMBs.
• Some areas of the SMB market will continue to be dominated by incumbents, while fintechs will succeed in winning over these customers on other fronts.

In full, the report:

• Highlights how incumbents have failed to serve SMBs
• Outlines where fintechs are successfully serving the same demographic
• Explains how legacy financial services players are fighting back
• Reveals which type of provider will win in each area

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