Unlocking the hidden value of their numbers is the next step for SMEs.
As the global economy continues to limp along, small and midsize enterprises (SMEs) will keep facing an uphill climb in 2024—whatever corner of the world they happen to occupy. The International Monetary Fund forecasts that GDP growth in emerging and developing economies will fall to 4% in 2023 from 4.1% in 2022 and remain at 4% in 2024, while GDP in advanced economies will drop to 1.5% this year from 2022’s 2.6% and to 1.4% in 2024.
SMEs can expect to face stronger headwinds in a sluggish economy than their larger brethren. Large corporations tend to have balance sheets that can weather the knock-on effects of such challenges as the Russia-Ukraine war, the current Middle East conflict, rising energy prices, tighter monetary policies, and governments’ cessation of pandemic support measures. For SMEs, stingier capital markets and the breakdown of open trade in favor of national self-reliance in many economies are making growth even more difficult.
This does not bode well for the global economy. Approximately 99% of businesses worldwide are SMEs, representing 60% of the business value-add, according to the OECD October 2023 SME and Entrepreneurship Outlook Polixy report. Small and midsize businesses are critical “to drive a resilient, inclusive and sustainable recovery,” the report’s authors warn.
Closing the Digital Divide
One of the most important lessons the pandemic has taught businesses is the necessity of digitalization: from improving online and mobile access for clients to virtualizing their organization’s infrastructure. Social media and cloud computing have become mainstream for most SMEs, the OECD report’s authors note, with use of the latter doubling in the past six years.
Unlocking the value hidden in the data will be critical. A World Economic Forum survey of 111 SMEs in 42 countries and 21 sectors found that “74% struggle to maximize the value of their company’s data investments.” More than half of those polled (55%) experienced difficulty finding data, and slightly fewer (54%) had difficulty maintaining their data.
“The greatest acceleration in digital diffusion in recent years has been in the conduct of big data analysis—albeit from low levels—and the purchase of cloud computing services,” says Sandrine Kergroach, head of SME and Entrepreneurship Performance, Policies and Mainstreaming at the OECD Centre for Entrepreneurship in a 2021 OECD report. “The adoption of business intelligence and supply chain management software have progressed little, especially among the smallest firms.”
Yet, the development of open banking standards, the sharing of application programming interfaces (APIs), and the rise of the sharing economy have begun to increase the value of SMEs’ internal data. That makes selecting the proper banking partner more critical than ever.
Firms need to balance access to the cheapest capital against the value-add of the technologies and other services banks can provide. This year’s World’s Best SME Bank Awards recognize those financial institutions that stand head and shoulders above their competitors in serving their SME client base. —Robert Daly
Methodology: Behind The Rankings
The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the winners of the World’s Best SME Banks 2024 based on a mix of objective and subjective factors. Editors consulted entries submitted by the banks and the results of independent research. Entries were not required.
Judges considered performance from April 1, 2022, to March 31, 2023. Global Finance then applied a proprietary algorithm to shorten the list of contenders and arrive at a numerical score of up to 100. The algorithm weights a range of criteria for relative importance, including knowledge of SME markets and their needs, breadth of products and services, market standing and innovation.
Once the judges narrowed the field, they applied the final criteria, including scope of global coverage, size and experience of staff, customer service, risk management, range of products and services, execution skills and use of technology. In the case of a tie, the judges lean toward local providers rather than global institutions. The panel also tends to favor private-sector banks over government-owned institutions. The winners are those banks and providers that best serve the specialized needs of SMEs.
BTG Pactual Empresas Earns Its Laurels
For the second year running, the Brazilian digital bank BTG Pactual Empresas has swept the Best SME Bank awards for Brazil, Latin America, and the world. The bank has eased access to capital for micro, small, and midsize enterprises (MSMEs), representing approximately 90% of Brazilian companies.
Clients get a low-touch digital channel, available 24/7, that nevertheless provides a high-touch experience using open banking standards and Brazil’s PIX instant payment system. For example, BTG Pactual Empresas has shortened the time needed to obtain credit to about 30 minutes for clients participating in rural credit programs, solar-power and green financing, and women-owned businesses. Newly opened SME accounts are operable within an hour.
Once an SME account is open, account owners can export their banking data to standard spreadsheets, Microsoft Excel and Google Sheets, and enterprise resource planning (ERP) applications, instantly reconciling accounts in their ERP systems.
BTG Pactual Empresas provides such additional services as single-sign-on multiuser and multibusiness accounts, online invoicing, collection management, budgeting capabilities, foreign currency exchange and digital receipts, along with payroll, insurance, and tax and investment services. Clients can reach expert support any time via chat, email, WhatsApp and toll-free calling. —RD
|Best SME Bank Awards 2024
|Best SME Bank in the World
|BTG Pactual Empresas
|Country & Territory Winners
|Erste Group Bank
|Ahli United Bank
|BNP Paribas Fortis
|BTG Pactual Empresas
|Royal Bank of Canada
|Banco Santander Chile
|Spar Nord Bank
|Banque Populaire and Caisse d’Epargne
|Hang Seng Bank
|Bank of Ireland
|Sumimoto Mitsui Financial Group
|National Bank of Kuwait
|Banco de Crédito del Perú
|Bank of the Philippine Islands (BPI)
|BNP Paribas Bank Polska
|Portugal Puerto Rico
|Banco Popular de Puerto Rico
|Qatar Development Bank
|Arab National Bank
|Industrial Bank of Korea
|Commercial Bank of Ceylon
|Siam Commercial Bank
|Bank of America
|Asia Alliance Bank
|Asia Alliance Bank