A new report shows that capturing the SME segment is now a critical strategy for large banks in the GCC region and is no longer limited to smaller retail or specialised banks.
From Saudi Arabia through to Oman, increased governmental and policy focus on scaling established SMEs, entrepreneurship support and a restrained SME credit market is providing the opportunity for banks in the GCC to seize a "first-mover" advantage and innovate its products and services to tap into SME segments, according to the recent report "Innovating SME Banking in the GCC" released by de Kerros & Company and cited by the English language daily newspaper Arab News.
Global best practices in SME banking show that banks can derive over 60 percent of its revenues from supporting SMEs, specifically through the introduction of non-loan based products and services.
For GCC banks to penetrate this segment and create returns from SME clients, they should pursue an execution strategy that is consumer-centric, and focuses on enhancing client relationships and transaction-based products.
The report addresses how banks can seize the largest untapped market opportunity, strengthen their market share, and deploy new tools that optimise serving SMEs, while mitigating risk and operational costs.
"Micro-enterprises and startups can easily access finance and benefit from dedicated support services within the entrepreneurial ecosystem," says Tatjana de Kerros, managing partner of de Kerros & Company and author of the report.
"However, existing SMEs who are more likely to scale and exponentially contribute to job creation and economic productivity are being neglected in the Gulf. Banks have a unique opportunity to capitalise on this segment by optimising financial and non-financial product and service offerings that meet the operational and growth requirements of SMEs, while increasing their returns and supporting private sector growth," he added.