Surprise, surprise, the more the world is getting FinTech-savvy and projecting the big banking environment as transaction-safe and riding high on customer relationship management, Small and Medium Enterprise segment is gravitating towards the ‘small, traditional bank banners’ and growing.
According to the latest release from Federal Reserve Bank of New York, up to 80% satisfaction levels were achieved by traditional small banks in their CRM rating.
The Credit Unions and the Big Banks scored 78% and 61%, respectively, on the same parameter. Online Alternative Lenders came in at the bottom of the pick, with just 46%.
The survey covered a number of SMEs, on the aspects of a successful application, procurement, maintenance and disbursement of loans from these entities.
Interestingly, the dissatisfaction levels were also surveyed in the process. Online Lenders fared comparatively poorer than Traditional Lenders on this score. The Alternate Lenders achieved a 19% dissatisfaction rate, while the Big Banks managed it at just 15%.
Of course, the Small Traditional Banks came out with flying colours as they recorded only a 5% dissatisfaction rate among the target group of SME customers!
One of the main causes of dissatisfaction towards Alternate Lenders is the high interest rates, with a third of survey respondents citing this factor.
In the Asian context, especially in India, the Alternate Lender segment may be compared to what RBI calls, ‘NBFC’. Like in the West, the NBFC entities do surpass traditional rivals in terms of application processing and the length of time it takes for a decision to be made. Loan application approvals by NBFCs are found to be faster than traditional banners.