Even before the pandemic, SMEs were struggling to obtain access to the funding they needed, when they needed it.

Outside of the Coronavirus Business Interruption Loans underwritten by a number of governments across the global economy, financial exclusion for SMEs has been a growing issue. Access to short-term funding often involves multiple hurdles, and even seemingly straightforward actions, like opening a bank account, are often more complicated than they should be. The challenges faced are now exacerbated by the current pandemic.

So many businesses can be commended for adapting so quickly to enforced lockdowns and finding innovative ways to pivot their offerings online, however, this comes with its own set of problems. Online marketplaces with settlement cycles of up to three months mean merchants could have to wait 90 days before receiving the cash from their sales, which leaves them in an impossible position when it comes to restocking, investing or replacing.

In the current environment, it's clear these companies are in urgent need of payment and financing solutions that can keep up with and support their business, rather than limit it, or make day-to-day operations more difficult.

Through collaboration, financial institutions can provide exactly this. Together they need to create affordable and accessible options that demonstrate a real understanding of SME needs. Banks and payments businesses working together can create a financial ecosystem that focuses on pooling resources and using each other's strengths to greater advantage.

Working in silos naturally creates limitations. Whilst payments businesses and FinTechs tend to be more agile and creative, their difficulties can lie in attempting to scale. Challenges with licensing or financial regulations, or even simply having less of an established client base than would be desired, are all commonplace. Banks on the other hand have the benefit of longevity; trusted values, customer loyalty, and a wealth of market experience, as well as being able to remove regulatory barriers for payments businesses.

But banks sometimes falter if they can't move quickly enough to respond to customer needs. However, payments businesses can assist with digitalisation, offering technology solutions that can enhance existing financial products, giving them the opportunity to work with new innovations, future-proofing their offering. This collaboration in turn, will generate solutions that help SMEs prosper.

The idea that collaboration between banks and FinTechs is necessary is gaining acceptance, but we need to go a step further and embrace these relationships and the impact they can have on revolutionising the ecosystem. And with the pressure online merchants are currently under, the sooner the better.

By stepping up and filling in the gaps, collaborative partnerships can support SMEs whilst also increasing revenue and uncovering new opportunities.