Digital Banking in the Small and Medium Sized Enterprise Sector

​McKinsey & Company’s 2023 American SME (small and medium-sized enterprise) survey found that the domestic banking industry has a 17 percent share of small-business banking. However, many experts say that banks could do a much better job of meeting customer needs in this sector.

SMEs present a higher lending risk than established corporations, so banks have historically reluctantly worked with them. To take advantage of the SME sector's growth opportunities, McKinsey recommends taking a “digital-first approach with a personal touch.” Artificial intelligence (AI) and embedded finance (integrating financial services into nonfinancial services and apps) are among many important digital tools in the banking sector.

The software development service provider Intellect Soft echoes this sentiment, claiming that “FinTech innovations” can generate value for SMEs. These innovations range from algorithms that assess creditworthiness to rapidly vet loan applications to online interfaces customized to meet each customer's unique demands. Forbes magazine presents the example of a Canadian bank employing AI modeling to give SMEs a constantly updated picture of their financial health.

Rebecca Gaskin Gain

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