95% of global firms are micro businesses (defined as businesses with fewer than 10 employees). They face unique challenges compared to their slightly larger counterparts, SMEs (10 – 49 employees); however, to most banks they are the same audience – not valuable enough on their own but crucial to creating volume of business banking customers. Once again, FinTech disruption has focussed on providing for traditionally underserved audiences and is starting to build out services that support micro-SMEs. So what can banks do to compete and retain their long-tail of customers?

Download our free infographic to see global data on the growth of micros and the challenges they’re currently facing.

Micros have too much to do, and not enough money or time to do it

Unsurprisingly, given the size of micros, their main challenges revolve around a lack of funding, resource, and time for admin and business management (vs working in the actual business). Micros need help getting services and tools that work for their business up and running seamlessly, and the ability to better manage cashflow.

25 Hours - average time single business owner spens on application with traditional bank

Improving the onboarding experience is an absolute fundamental for retaining micros. What’s more if the onboarding process leads to immediate gratification (e.g. the account portal is immediately available, or there is a task that can be completed instantly etc.) this can drive stickiness with the services on offer and go the extra mile in creating a delightful experience for the merchant.

This doesn’t end once the merchant is on the portal and using the product.

Creating easy to use experiences and access to information supports a business owner or manager in reducing the time spent on admin. The ability to see your settlements, query transactions and self-serve any changes to your account through a single, open any time, digital portal supports the SME in reducing their admin and ensuring accuracy of results.

15 hours - average weekly spend on financial admin

Another area of concern for micros is funding.

A result of the COVID-19 pandemic has been most micros have gone into “survival mode” (CNBC).

Due to the high-risk and volatile nature of micro-SMEs, access to funding through traditional lenders can be tricky and competitive business grants require a huge time investment from business owners. With micro businesses already more cost-aware than typical SMEs, they’re in need of services that will help their businesses grow while not adding to the admin of daily operation or loading up on monthly fees. Many micros also need support in knowing what options are available to them and that they could utilise. Utilising data on the businesses to provide Insights into products and services that they might pre-qualify for like merchant cash advances can also support micro businesses in not only managing their cash flow but also in understanding options available. Additional services like low cost acceptance, and downloadable terminals support merchants in getting back to face to face business and drive revenues.

Our free infographic

Why banks should win? 

Fundamentally micro-SMEs still need banking products, but with an ease of experience:

  • Onboarding – that’s quick, easy, and leads to instant results to support their business
  • Cash advances – the knowledge of their options and the ability to access and manage digitally 
  • Low cost acceptance – affordable payment options to serve their customers 

But most importantly is the ability to easily manage and access these services, and a time and place that is most convenient to them. Fundamentally what will allow banks to win in serving their products to micros will be the ability to provide digital experiences and self-serve around the core products.