In today’s rapidly evolving business environment, trust in financial institutions remains a cornerstone for companies, especially small and medium-sized enterprises (SMBs). From securing loans to managing payments and providing strategic financial advice, banks play a pivotal role in enabling business growth. However, in a landscape where FinTechs and neo-banks are encroaching on traditional banks’ market share, it is essential to explore why businesses continue to rely on banks for trust and what more banks can do to stay competitive.  

Trust Is What Banks Must Bring to the Table  

Trust is an essential factor in the relationship between businesses and banks, especially when it comes to managing finances and navigating risks. According to PwC’s 2024 Trust Survey, a staggering 93% of business executives believe that building and maintaining trust is directly tied to their company’s financial performance. This statistic underscores the importance of trust as a foundational element in all business interactions, especially those with financial institutions.  

For businesses, the relationship with their bank is more than just transactional. Banks provide critical financial services such as lending, risk management, and payment processing, but their value extends beyond these basic offerings. When businesses face financial challenges or need guidance in expanding their operations, they often turn to their bank for advice and support. For instance, small businesses that rely on banks are more likely to keep their deposits during times of financial stress than larger corporations, making banks a stable financial partner.  

In addition to stability, businesses also rely on banks for their comprehensive risk management frameworks, particularly in the realm of fraud prevention and cybersecurity. With an increasing number of SMBs reporting issues with fraud, especially in markets like Brazil where fraud concerns affect up to 38% of businesses, banks have an opportunity to step in and offer tailored risk mitigation strategies. By providing secure payment gateways, advanced fraud detection, and cybersecurity services, banks can build deeper trust with their clients, ensuring that their financial transactions remain secure even in global markets.  

The Opportunity for Banks to Do More  

Despite the inherent trust businesses place in their banks, there is room for growth. As SMBs expand into international markets and engage with global suppliers, their financial needs have become more complex. Yet, many banks have been slow to adapt to the shifting demands of these smaller businesses. A McKinsey survey found that many SMBs are not getting the full suite of services they need from their primary banks, particularly in areas like cash flow management, digital tools, and payment processing.  

This gap between expectation and service represents a significant opportunity for banks. By embracing digital transformation, banks can enhance their offerings and provide the seamless, integrated financial services that SMBs increasingly require. PwC’s research suggests that 66% of SMBs have greater expectations today for digital banking services compared to just a year ago. This includes the need for mobile-first banking platforms, real-time payment processing, and integrated cash flow management tools. Banks that invest in these technologies will be better positioned to meet the evolving needs of their business clients.  

Another area where banks can strengthen their relationship with SMBs is through tailored financial advisory services. Many businesses, particularly smaller ones, lack the in-house expertise to manage complex financial challenges such as international trade finance, currency risk, and supply chain financing. Banks that position themselves as trusted advisors, offering bespoke financial strategies and risk assessments, can foster deeper, longer-term relationships with their clients. This is particularly true in markets like the United States, where 82% of SMBs report a positive relationship with their bank during challenging times, largely due to the advisory support they receive.  

Ultimately, the banks that prioritize building trust through innovation and personalized service will be the ones that thrive in the long term. As trust remains a key factor in business success, banks have an unparalleled opportunity to solidify their role as essential partners to businesses in a rapidly changing financial landscape.

——

Sources:

• https://www.pwc.com/us/en/library/trust-in-business-survey.html

• https://www.mckinsey.com/industries/financial-services/our-insights/banking-matters/five-ways-for-banks-to-better-serve-small-business-clients

——

Image credit: rawpixel.com | Freepik