Services beyond banking: How financial institutions can truly partner with MSMEs

For decades, the relationship between banks and micro, small and medium enterprises (MSMEs) has been defined by a relatively narrow scope: lending, payments, treasury services and day-to-day transactions. These are, of course, essential. But in today’s increasingly digital economy, they are no longer enough to differentiate one bank from another in the eyes of small business customers.

A recent industry report highlights a striking trend: banks that want to stand out and deepen their MSME relationships are moving beyond banking. They are expanding their value propositions by offering additional non-financial services that help businesses run and grow.

From banking to business enablement

The report calls out a fascinating example from India: a leading SME bank integrated a lightweight enterprise resource planning (ERP) solution directly into its app. MSME customers gained access to basic ERP functions like inventory management, billing and financial tracking without leaving their banking ecosystem.

For a small business, this is transformative. Instead of juggling multiple third-party tools, they can handle both their finances and their operations in one place. For the bank, it’s a double win: not only does it strengthen customer loyalty, it positions the bank as a partner in day-to-day business success rather than just a financial services provider.

Why this matters

Small businesses don’t just need credit, they need customers, efficient operations and growth. When banks step into that broader role, they address real pain points and create sticky long-term relationships.

Think of it this way: if two banks offer a loan at a similar rate, but one also provides tools to invoice clients, manage cash flow or even launch an online store, which bank will an MSME choose? More importantly, which bank will they be less likely to leave?

This isn’t just about customer satisfaction, it’s about strategic advantage. By embedding business-enablement tools into their service mix, banks can:

• Reduce customer churn by increasing reliance on their ecosystem
• Open new revenue streams through subscription-based or usage-based models
• Gain deeper insights into MSME needs, informing better product design
• Build a differentiated brand identity in an increasingly commoditised sector
  

The spectrum of value-added services

“Beyond banking” can take many forms, and banks don’t need to build everything themselves. Partnerships, white-label solutions and integrations make it possible to offer a range of services that extend well past the traditional financial toolkit.

Some examples include:

• Digital accounting and billing tools – helping MSMEs manage finances more efficiently
• Mini-ERP solutions – lightweight, accessible platforms that streamline business operations
• E-commerce and website builders – enabling MSMEs to find customers, sell online and grow revenue
• Payroll and HR support – addressing critical back-office needs
• Marketing and customer engagement platforms – helping businesses attract and retain clients

The unifying theme? Each of these services directly supports MSMEs in making money, not just managing it.

A shift in mindset

The move toward services beyond banking requires a shift in mindset for financial institutions. Instead of thinking primarily as product providers, they must think as ecosystem builders. The bank’s role is not only to safeguard assets or extend credit, but also to enable the success of the businesses it serves.

For MSMEs, success often hinges on simplicity and integration. Every extra tool, platform or process they need to manage creates friction. By embedding value-added services, banks reduce that friction and weave themselves into the everyday workflows of their customers.

The road ahead

As MSMEs continue to digitise, their expectations of banks will rise. They will increasingly look to their financial institutions not just for access to capital but for access to growth. Banks that respond with creativity, partnerships and integrated services will stand apart.

The future of MSME banking won’t be defined solely by interest rates, digital apps or faster payments. It will be defined by who can deliver real, day-to-day business value and who can become a trusted partner in growth.In other words: the banks that win will be those that move beyond banking.