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The UK banking industry’s focus on commercial banking for small- and medium-sized enterprises (SMEs) is now at its most intense in more than a decade. It isn’t hard to see why: Alongside the new funding—and controversies—generated by the RBS remedies, we’re also seeing the big incumbent players targeting investments at SME services.

All of this is happening at a time when automation in retail banking has advanced apace, opening up opportunities to replicate the benefits of digital in commercial banking. But we’ve yet to see the same leapfrog step-change in commercial banking as in retail.

Paradox in commercial banking

What’s going on? The fact is, there’s now a paradox in commercial banking. On the one hand, there’s lots of change, with advances in digital, new market entrants, the RBS remedies and Open Banking. On the other, traditional values remain in place, with the relationship manager (RM) model still the bedrock for most banks.

But beneath the surface, customers’ expectations are shifting. SME owners experience the functionality of retail banking every day via their personal accounts. And they’re increasingly frustrated that they don’t see this reflected in their business current accounts.

So, do RMs fit into this landscape anymore? If so, where? What do they bring to the party?

To answer these questions, and many more, my colleague Tom Merry chats with Dan Wilkinson, head of transformation at Lloyds Banking Group, in a podcast hosted by Stephen Pegge, managing director of Commercial Finance at UK Finance.

Together they investigate what’s needed to engage SME customers cost-effectively in the way they want at a local level. A way that enables the RM to pivot away from time-consuming and routine activities towards higher value services using their understanding of Open Banking, the wider financial services ecosystem and getting into the customer’s shoes.

A new segmentation model?

But making this work will also need something else: a new segmentation model that looks beyond traditional measures like turnover to more sophisticated ones like digital propensity—and then applies advanced technologies to provide each customer with precisely the right balance of frictionless digital experience and human touch from their RM.

To experience the full scope of the discussion, listen here.