The Euro Banking Association releases report on Open Banking for SMEs

The Euro Banking Association (EBA) released a report on the opportunities Open Banking provides for improving financial services offered to small and medium-sized enterprises (SMEs).

“Open Banking for SMEs – Enhancing financial services for the backbone of Europe’s economy” provides a comprehensive overview of the specific challenges facing the SME sector and how this diverse and heterogenous customer segment can be better served through tailored financial services and value-added offerings based on Open Banking.

High-level findings:

. The SME sector is heterogeneous and highly impacted by digitalisation.

. SMEs’ financial needs are complex which has made it difficult to serve this customer segment with tailored financial services.

. An evolving ecosystem provides the foundation for a host of new, innovative propositions for SMEs.

. Leveraging Open Banking can lead to a win-win-win situation for SMEs and different financial service providers.

. Different Open Banking strategies can be pursued, based on a direct (incorporation) or indirect (provision) distribution model or a combination of multiple approaches.

For the success of Open Banking in the SME segment, a range of attention points needs to be observed:

. To succeed in the SME segment, Open Banking needs to be embedded in a broader transformation. The prerequisite is to establish a customer-centric mindset and implement a clear SME strategy before choosing an Open Banking approach and make any related “build or buy” decisions.

. The provider’s operating model needs to accommodate a truly customer-driven approach leveraging Open Banking with elements including a digital-ready culture, an API-enabled technology stack and the capabilities for leveraging internal and external data.