Small and medium enterprises (SMEs) are the backbone of the Australian economy, accounting for nearly 98% of all businesses and contributing a third of the nation’s GDP. Yet, despite their economic significance, most Australian banks continue to offer SMEs little more than rebadged retail products—missing a critical opportunity to deliver tailored, data-driven solutions that foster loyalty and drive sustainable growth. As digital transformation accelerates across the sector, the time is ripe for banks to reimagine their approach to SME banking and seize a leadership position in this vital market.
Australian SMEs are not simply smaller versions of large corporates or retail customers. Their needs are distinct, shaped by the complexity of running a business, managing cash flow, accessing credit, and navigating regulatory requirements. Recent research surveying over 2,000 SME financial decision-makers in Australia reveals that while satisfaction with current banking services is generally positive, there is considerable room for improvement. Notably, 40% of SMEs are only ‘somewhat positive’ about their bank, and just 29% cite technology and innovation as key reasons for their banking choice. This signals a clear gap between what SMEs expect and what banks currently deliver.
SMEs are looking for more than basic digital banking—they want seamless, secure, and supportive experiences that help them run their businesses more efficiently. This includes:
Despite the critical role SMEs play, most banks have yet to move beyond retail-centric digital offerings. This approach fails to address the complexity and dynamism of SME operations. Onboarding processes are often cumbersome, credit decisioning is slow, and digital tools lack the integration and flexibility SMEs need to manage their finances holistically. Moreover, when SMEs experience issues such as cyber-attacks, more than half report that their bank’s support is less than completely helpful—undermining trust at a time when security is paramount.
The result is a market characterized by apathy and inertia. Nearly half of SMEs perceive no improvement in their banking relationship since the Royal Commission, and with new definitions set to expand the SME segment under the 2025 Banking Code, the urgency for banks to differentiate is only increasing.
Australian banks have a unique opportunity to break this cycle by putting the SME customer at the heart of their digital transformation. The most forward-thinking banks globally are moving beyond incremental change, embracing bold, data-driven strategies that deliver real value to business customers. Key imperatives include:
Legacy systems are a major barrier to innovation. By migrating to cloud-native, modular core banking platforms, banks can rapidly develop and launch new SME products, integrate with ecosystem partners, and unlock real-time data insights. This approach enables banks to tailor solutions to the specific regulatory and operational needs of SMEs, while reducing costs and increasing agility.
SMEs expect the same frictionless experiences they encounter in consumer apps. Banks should focus on simplifying and automating high-value processes—such as onboarding, credit origination, and payments—using straight-through digital processing. This not only improves satisfaction but also reduces operational costs and risk.
Harnessing data and artificial intelligence allows banks to anticipate SME needs, offer personalized recommendations, and provide timely alerts—whether it’s identifying cash flow risks or surfacing relevant financing options. Proactive, data-driven engagement can transform the bank-SME relationship from transactional to advisory, deepening loyalty and wallet share.
With cyber threats on the rise, robust security and rapid, empathetic support are non-negotiable. Banks must invest in advanced fraud detection, real-time monitoring, and clear communication to build trust and demonstrate their commitment to protecting SME customers.
SMEs increasingly expect their banking services to be integrated with the platforms they use to run their businesses—such as accounting, payroll, and e-commerce solutions. By building open, API-driven platforms, banks can partner with fintechs and technology providers to deliver embedded finance experiences that add tangible value.
Transformation leaders in Asia Pacific and beyond offer valuable lessons. For example, a leading Thai bank partnered with digital transformation experts to deliver a new business model and technical foundation in just 12 weeks, enabling rapid product launches and innovative customer engagement. Similarly, cloud and DevOps platforms have accelerated digital product development, reducing costs and time-to-market while empowering banks to better serve SMEs.
Australian banks are already experimenting with challenger tech stacks, fintech partnerships, and new business models like Buy Now, Pay Later (BNPL). The most successful are those that:
The SME segment is too important—and too full of potential—to be left behind in the digital banking revolution. By moving beyond retail rebadging and embracing a customer-centric, data-driven approach, Australian banks can differentiate their offerings, drive SME satisfaction and loyalty, and unlock new, sustainable revenue streams.
The path forward requires bold leadership, investment in modern technology, and a relentless focus on the unique needs of SMEs. Those banks that act now will not only capture market share but also help power the next wave of Australian economic growth.
Ready to reimagine your SME banking strategy? Connect with Publicis Sapient to unlock exclusive insights and accelerate your digital transformation journey.