Wed Sep 18 04:12:15 UTC 2024: ## Banks Missing Out on SME Growth Potential, New IBM Report Finds

**ARMONK, N.Y., Sept. 18, 2024** – Despite the critical role of Small and Medium-sized Enterprises (SMEs) in the global economy, banks are failing to fully tap into this market, according to a new report by IBM’s Institute for Business Value and the Banking Industry Architecture Network (BIAN). The report, titled “Banking for Small and Medium Enterprises: Serving the World Economy with Data and AI,” reveals a significant disconnect between the needs of SMEs and the services offered by banks.

The report, based on a global survey of SME owners and managers, banking executives, and fintech leaders, highlights that SMEs account for 90% of businesses, 70% of the workforce, and 50% of global GDP. While this market segment represents a significant opportunity for financial institutions, banks are primarily focused on risk mitigation, regulatory compliance, and cost-efficiency, often failing to provide the specific services needed by SMEs.

“The disconnect between what small and midsized business leaders say they need in order to grow and the services most banks currently offer is profound,” said Shanker Ramamurthy, Global Managing Partner Banking & Financial Markets, IBM Consulting. “Fortunately, emerging technologies like generative AI, combined with automation and a robust data strategy, can empower financial institutions to play a more impactful role in the growth of this critical client segment.”

The report emphasizes the importance of a flexible technology environment that can meet the needs of a dynamic marketplace. This includes leveraging a hybrid cloud strategy to fully utilize generative AI for customer insights while ensuring data privacy, security, and resilience.

“Banks around the world increasingly rely on the cost-effectiveness of cloud for high-volume transactions, but they retain their core functions and most sensitive data on premises,” said John Duigenan, General Manager Global Financial Services Industry, IBM Technology. “A robust hybrid cloud strategy allows institutions to fully leverage the power of generative AI for informed insights into the behaviors of customers and their anticipated needs while ensuring the highest levels of privacy, security, and resilience.”

The report concludes that adopting a standardized approach to technology architecture is crucial for financial institutions to streamline operations and foster innovation. By embracing proven industry standards, banks can enhance their competitiveness and better serve the needs of their diverse client base.

“As financial institutions grapple with how to best serve their various client segments, it’s clear that a rational, standardized approach to technology architecture lays the groundwork for substantial efficiencies and future innovation,” said Steve Van Wyk, Chairman, Banking Industry Architecture Network. “By adopting proven industry standards, banks lay the essential groundwork to improve their competitiveness.”

For the full report, visit http://www.ibm.com/thought-leadership/institute-business-value/en-us/report/small-medium-enterprises-banking.

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