Today's banking market for small and medium-sized enterprises (SMEs) is being reshaped by two, often contradictory, forces. Commercial banks are having to find the balance between rapid change and traditional, established business models for serving SMEs as SME customers take a digital approach.

Accenture's 2019 UK SME Banking Survey reveals four top-line findings that, in combination, illustrate how the underlying forces are playing out and creating tensions in the SME banking market:

• The market won't change through switching alone - only about 15 per cent of SME customers intend to switch bank within the next year.
• SME customers? fundamental needs haven't changed radically - 55 per cent of SMEs consider their own banking needs to be "simple".
• SMEs? expectations about how their needs will be met are changing - over 60 per cent of SMEs now see clear advantages in artificial intelligence (AI) compared to traditional human services.
• SME banking can't afford to lose the human touch completely - only around 25 per cent of SMEs would give up their relationship manager (RM) for a "digital-only" alternative, even if it was cheaper.

The survey also found that, while most SMEs value their RM,  72 per cent say their business positively needs digital banking services.

It is a conundrum that incumbent banks need to solve quickly if they are to stay ahead of disruptive new entrants in SME banking.

Four imperatives to strike the right balance

From our survey we have identified four key imperatives that commercial banks should take to strike the right balance between the new and the old,  while also lowering costs to serve and provide customers with value for money:

• Blend RMs and digital to change the defaults by creating the "human + machine" colleague
• Get to know your existing and target customers? unique DNA
• Re-architect IT to develop compelling new propositions, delivered at pace
• Embed data-driven intelligence throughout the BAU lifecycle

Time to lay foundations for the future

The biggest risk for banks is that they fail to reconcile and respond to the tensions in the market until it is too late. It is unlikely that any bank will be able to succeed as a completely digital player; but nor is the answer persisting as a high-touch relationship bank. In a marketplace where customers are demanding the best of both worlds, banks need to find a way to give this to them. Now is the time to lay down the right foundations to do that.

Don't miss Accenture's latest two podcasts on the commercial landscape and the future proposition here.