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Clicking through Cash | Challenges for Portuguese SMEs Accessing Loans Through Banking Apps

SMEs are the backbone of the Portuguese economy. Yet, a recent experiment revealed a hurdle these businesses face: accessing loans through their banks' mobile apps. The experiment involved testing the loan application process on the banking apps of four major Portuguese banks. The goal was to determine how many clicks it takes for SME clients to initiate a loan request. The results showed that only one bank – out of the four- offered a fully digital journey, allowing loan applications entirely within the app. The remaining banks required SMEs to navigate a maze of menus and leading them outside the app to complete forms or initiate contact with a bank representative.

This highlights a critical challenge for Portuguese SMEs. Fast and efficient access to liquidity is essential for business growth. A complex loan application process through a banking app can be a significant deterrent, costing valuable time and potentially hindering growth opportunities.

Three Critical Building Blocks for SME Lending Transformation

1.         Transparency is Key : Banks often require a wide variety of documents, frequently in paper form and submitted in different tranches, compromising the customer experience. SMEs need a simple, intuitive loan application process within their banking apps. Every unnecessary click adds friction to the experience. Banks should clearly show credit lines, what needs to be done to qualify, and the main purpose of the loan. Additionally, they should showcase the products clients can access if they meet certain criteria.

2.      Instant Decisions: Similar to retail clients, SME customers value speed and convenience. They seek a clear and efficient process that provides a faster approval time and quicker access to cash, mirroring the experience they receive from their retail bank accounts. By following what has been done in consumer finance, banks should improve Know Your Business (KYB) through data integrations, maximizing the use of data to generate customer insights and, therefore, provide better services.

3.      Hyper-personalization: Traditional banks often struggle to cater to the specific needs of every SME industry. Solutions like Five Credit, Finanfarma, and Agrofin are designed to address the unique challenges faced by SMEs in specific sectors. This underscores the importance for banks to embrace a more personalized approach to SME lending.

As personal banking achieves a peak of digital transformation, banks will likely turn their focus to SMEs to increase customer loyalty. Especially with the growth of the creator economy and self-employed professionals, the examples mentioned above are just the beginning.

Soon, banks may explore offering:

  • Cash advance and automated factoring services

  • Integration with fiscal authorities to finance tax payments

  • Revenue-based financing for online businesses

Fintech Solutions understands the importance of a seamless digital experience for both financial institutions and their clients. Talk to the team to develop innovative digital journeys that enables banks to offer their SME clients the best possible experience


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