Supporting SMEs is a mantra of governments and banks alike, writes Brian Caplen. But any new policies will need to take account of changes in the international economy.
The global economy is being restructured and small and medium-sized enterprises – SMEs – are likely to be the winners in the new world order. Always the backbone of the domestic economy, SMEs are now able to export much more easily, and rather than being solely reliant on bank loans they have many more financing choices.
Thanks to the new fintech companies dealing in payments, getting paid has also become a lot easier. All this means that banks can no longer simply declare themselves the greatest supporters of SMEs unless their products and customer care are really up to speed. They need to be measuring themselves against the best in the market and not against the standards of banking competitors. Too much has changed for that.
The arrival of platform operators such as Amazon and eBay has opened up foreign markets for many SMEs that previously would not have considered exporting. Not only do the platform operators put SMEs in touch with new markets, but using the data they obtain from the business, the internet giants are increasingly prepared to offer finance too.
On top of this, the restructuring of the global economy opens up new opportunities for SMEs. After years of building global supply chains, large corporations are now seeing them upended and not only because of trade wars.
The rise of the digital economy, artificial intelligence and 3D printing is causing large companies to rethink how they source, make and distribute goods. Services are becoming as or more important than manufacturing and some can be exported by smaller companies over the internet. Disruption is opportunity and the suppliers in the new system may not be the same ones that supplied the old system. A whole wave of start-up SMEs are about to get their first international break.
Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen
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