5 ways card issuers can address the unmet needs of SMEs.

By Nicky Cockerill
Consultant

Small and medium-sized enterprises (SMEs) are the backbone of the UK economy, making up 99.9% of the total UK business population in 2023. They account for 61% of total employment and generate 51% of private sector turnover, according to the Federation of Small Businesses.

Despite their importance, SMEs remain underserved by financial institutions. Straddling the gap between large corporations and individual consumers, SMEs often receive repurposed financial products that fail to meet their specific needs. A survey by The Telegraph found that 35% of SMEs would switch banks for better service, highlighting a gap that card issuers can address.

Beyond financial services, SMEs also face broader economic challenges, from the aftermath of COVID-19 and Brexit to rising operational costs. Nearly 45% of SMEs reported significant post-pandemic revenue declines, per the Office for National Statistics. These constraints make cost-effective, value-driven financial solutions more critical than ever.

For card issuers, this presents a major opportunity. By aligning products with SME needs, they can increase adoption, drive engagement, and unlock growth.

Below are five strategies to help card issuers create SME-friendly offerings that foster loyalty and revenue.

1. Personalise the Offering

SMEs value tailored financial solutions. A study by EY found that small business owners see themselves as unique, yet many banks offer standardised products that don’t reflect their needs.

To enhance engagement, issuers should:

• Offer industry-specific rewards and merchant partnerships (e.g., Amazon, fuel discounts)
• Provide flexible cashback or points-based rewards
• Allow annual card fees to be paid using points

Capital on Tap’s 1% cashback and versatile reward redemption options are great examples of how personalised benefits can drive SME loyalty.

2. Streamline Expense Tracking

SMEs spend an average of 11 hours per month on expense management, costing businesses an estimated £291 per employee. Research from Sage reveals that 80% of SMEs now rely on digital tools for operations, making streamlined expense management an essential card feature.

Issuers can:

• Provide mobile-first expense tracking tools
• Offer real-time spending notifications
• Enable seamless integration with accounting platforms like Xero, QuickBooks, and Sage

Revolut Business exemplifies this by allowing SMEs to sync expenses in real time, request approvals, and automate financial reconciliation.

3. Strengthen Fraud Protection

Fraud is a growing concern for SMEs. UK Finance reported a 151% increase in fraud losses between 2021 and 2022, reaching £1.12 billion. Many SMEs lack the resources to combat these threats, making security features a key differentiator.

To protect SMEs, issuers should:

• Enable instant card freezing and transaction limits
• Offer location-based security controls
• Highlight fraud liability protection in marketing

By prioritising security, issuers can position their business cards as safer alternatives to traditional payment methods.

4. Accelerate the Onboarding Process

Many SMEs still use personal bank accounts due to convenience. Research by Pay.UK indicates that cumbersome onboarding processes discourage business owners from switching providers.

To increase adoption, issuers should:

• Digitise and automate application processes
• Offer real-time approvals
• Simplify document submission with intuitive user interfaces

A frictionless onboarding experience can significantly boost SME acquisition and conversion rates.

5. Maximise SME Engagement

Education is a key driver of adoption. Many SMEs are unaware of the advantages of business cards, defaulting to personal accounts out of habit. By demonstrating the tangible benefits - such as potential cashback earnings - issuers can increase engagement and retention.

To achieve this, issuers should:

• Use integrated marketing strategies to educate SMEs on business card advantages
• Offer insights on maximising rewards and cashback
• Provide dedicated SME support and advisory services

By adopting these strategies, card issuers can build stronger relationships with SMEs, addressing their unique challenges while driving commercial success. SMEs are actively looking for financial solutions that add real value - those who meet this demand will gain a competitive edge in an underserved market.

If you want to ensure your SME-focused card strategy is backed by deep market insights, let’s connect. At KAE, I help financial institutions create customer-centric solutions that drive real impact.