Banks that pulled back on lending to small and medium-sized enterprises (SMEs) during the financial crisis are increasingly re-examining how to approach this sector. The current environment has opened up opportunities for lenders that can cater specifically to SMEs and fill the gap left by those who exited the market as a result of the financial crisis.
However, many banks are facing a dilemma of how to categorise SMEs and where to place them within their operations. Where SMEs are viewed as an extension of the individual retail banking customer base, processes can be industrialised. However, some needs unique to SMEs, such as the need for advice on how to run their business, can be overlooked. But SMEs are too small for the bespoke and tailored services of the corporate banking world. “The poor SMEs are often left in the middle,” says Phillip Monks, chief executive of Aldermore, a UK bank that specialises in lending to small and medium-sized businesses.
