According to a latest report from Accenture, UK banks could create an £8.5 billion revenue opportunity by broadening services for small and medium enterprises (SMEs), a sector which generates just under 50 percent of the UK’s private sector turnover.

The study surveyed 1,000 UK SMEs about perceptions of their bank, including the relevance of products and services offered, and found that SMEs are demanding more value-added services to meet their broader business needs, and banks have an opportunity to develop more tailored propositions to meet these.

The report, “SME Banking 2020; Changing the Conversation”, says that banks need to invest in technology platforms to provide services that will help SMEs to manage their operations more effectively, and seamlessly migrate their existing SME banking customers to these new digital channels.

It noted that as several competitors are targeting SMEs with cutting-edge digital offerings, banks urgently need to gear up their capabilities to provide the same service. Emphasizing that SMEs favour assisted human interactions over self-service in their dealings with banks, the report said that digital innovation could be real game changer in this context.

“By using artificial intelligence, machine-learning and video technologies, banks can reimagine the relationship manager role for a digital marketplace, and start to deliver the services SMEs require through new digital channels”, it added.

The report recommends banks to invest in the “analytical capabilities” that will enable them to segment their SME customer base, understand its multiple needs, and target key segments with relevant products and services. Explaining further, it said that if banks develop the required digital channels, they would be able to benefit substantially from big data, blockchain and advisory services.

“Our research shows the range of services that are in demand. Some of them, like P2P lending are perhaps less surprising. What’s more interesting is the level of demand for cloud, big data, blockchain and business advisory services. Each of these could represent a significant new revenue stream for banks, provided they develop the digital channels and/ or partnerships needed to deliver them”, the report said.

Speaking of innovations, 8% of the respondents said that they would be interested in using blockchain technology in their business, 10% said that they would like to use “Big Data” services in their business, 17% preferred cloud services and 28% said they would be interested in using fully automated banking processes.

Gareth Wilson, Accenture Banking Practice lead for the UK/I, Accenture commented: “SMEs want banks to be more relevant and provide a wider range of business services. Banks need to recognise and seize this opportunity. Unless they do, SMEs may take their business elsewhere. Banks need to shift their mindset from ‘FS service provider’ to ‘SME service provider.’ Through new technologies and new thinking, banks can capitalise on £8.5 billion of potential annual revenues. If they don’t they risk being disrupted out of a market that SMEs actively want them more involved in.”