SMBs & SMEs — Definition and Approach

3 min readFeb 22, 2019


Market research has revealed that many financial institutions and especially banks have no concrete definition of small- and medium-sized businesses. There is a difference between SMEs and SMBs for banks to define the right approach for servicing those. The categorization of companies has changed over time, and thus we provide a brief explanation on SMBs, SMEs and the difference between two abbreviations.

SMB stands for small-to-medium-sized business. Such companies usually employ part-time workforce managing their clients, data and IT aspects. As a part-time employee usually dedicates 20 or fewer hours per week to fulfill their requirements, these kinds of businesses commonly use third-party or outsourcing services to maintain their operations.

SMEsmall-to-medium-sized enterprise — usually employs a full-time workforce. SME is a more globally-used term than SMB and has a wider range of operations that it provides. SMEs cover all range of activities, starting with selling and ending with manufacturing.

The difference between SMBs and SMEs might seem minor, however, the understanding of it is important for banks. Right categorization and segmentation help financial institutions create the right banking solution (service) — top banks report a substantial advantage in effectiveness and faster profitability from using the right definition of a business. For example, some medium-sized businesses might imply a corporate banking approach, whereas there might be a small-sized enterprise that requires a mass-market approach similar to retail banking.

Why is it important? Most of the banks do not favor cooperation with SMBs or SMEs due to the lack of profit and high risk of failure — or their bias to it. Because they lack simple theoretical knowledge, they distinguish themselves from many opportunities that come with cooperating with small-to-medium-sized enterprises.

The thing banks should consider when finally turning to SME services is that they will have to shift away from traditional banking principles. Most effective strategies include fast and high-level decision-making and consideration of SMEs data-driven business model. A safe and successful solution for that is to create an SME segment in banking, which specializes in fast onboarding, an easy performance of tasks and flexible operation services. Some big banks have been successful in separating their SME solutions from other banking services, such as Wells Fargo in the US. Additionally, the growing popularity of small-to-medium-sized enterprises leads to the creation of digital (neo) banking solutions specializing in SMBs and SMEs only. For instance, Crassula is introducing an initiative to support small- and medium-size businesses (SMBs) and new companies by launching digital banking for entrepreneurs. It will allow enterprises to focus on business eliminating the time for bookkeeping and lower entry threshold along with an opportunity to use open API platform for connecting Crassula banking account to their workflow, create new tools that work with Crassula accounts and more — things that are crucial for growing businesses.

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Crassula is a software platform that helps businesses and financial institutions to build their own payment systems, wallets, online, mobile banking and more.