In this insightful interview, we sit down with Thorsten Seeger, an esteemed adviser for International Growth and Strategy at smeGo and SME Bank. Thorsten’s extensive background in both traditional and fintech banking sectors provides a unique perspective on the evolving financial landscape for small and medium-sized enterprises (SMEs).

Before joining smeGo and SME Bank, Thorsten served as the Group COO of October and as the Managing Director of Funding Circle Germany, where he spearheaded the development of a market-leading small business lending proposition. His decade-long experience in the traditional banking sector in the UK, including various front-office leadership roles at Barclays and Lloyds Banking Group, has equipped him with a deep understanding of SME banking. At Barclays, he held notable positions such as Head of Relationship Banking (London) and Commercial Director for SME Banking, while at Lloyds, he was responsible for the distribution of Financial Markets products to SME customers.

In this interview, Thorsten discusses key highlights from his career journey and the factors that have shaped his approach to growth and strategy in the financial services sector. He delves into SME owners’ challenges, the evolving relationship between large systemic banks and fintech companies, and the significant trends anticipated in SME banking over the next decade. Thorsten also shares his vision for the future of smeGo and SME Bank, emphasizing the importance of leveraging technology and banking expertise to create a Pan-European champion for SMEs.

Question: Thank you so much for taking the time to talk to us. Please give us a short overview of your career journey. What has shaped your approach to growth and strategy in the financial services sector?

Answer: Two significant factors have shaped my approach. On one hand, I spent quite a long time in large banking organizations. These institutions have numerous clients and employees, all of whom mean well. However, these large organizations, specifically large banks, tend to stifle innovation within their teams. They impose such tight constraints on what employees can and cannot do and how they should do things, making it difficult for them to predict outcomes and generate ideas. This has shaped my experiences and shown me aspects I didn’t particularly like.

On the other hand, I have been in the FinTech sector for the better part of six years, specifically focusing on lending. In one particular experience, we acquired a lending business experiencing hypergrowth, but the loan book we acquired was terrible, leading to many problems. I learned firsthand that lending money is relatively easy, but collecting it is not.

These two experiences have shaped me in ways that, on the one hand, allow me to create an environment that is open to innovation and new ideas. At the same time, I want to ensure that growth is controlled, particularly with the lending book.

Additionally, working in large FinTechs with some of the best people in the industry taught me the importance of data-driven decision-making. Due to their long tenure, people often rely on gut feelings in more traditional institutions. However, in FinTech, I learned that while using gut feelings to build a hypothesis is useful, it’s crucial to always back it up with real data to prove your goal.

Question: That brings me to what motivated you to join smeGo, especially at this particular stage in our growth. What about the company’s vision and culture resonated with you?

Answer: The business is at an exciting point in its lifecycle. For the first time, we are considering taking on external equity to accelerate our growth. This is a thrilling opportunity, and we have the chance to build a Pan-European champion. We are already active in five countries, but we have the potential to do much more. The unique combination of having both FinTech and banking capabilities under one ecosystem offers more opportunities than many other players at this moment.

What excites me about the team is their hands-on, can-do attitude. They have a mindset of, “How can we do things? How can we get it done?” I really appreciate the drive and enthusiasm within the business.

Question: What’s your perspective on the current economic situation in Europe? How will it impact SMEs over the coming years? Do you see their role evolving or staying pretty much the same?

Answer: The overall macroeconomic landscape in Europe is challenging. This year, many elections are happening in Europe and globally, significantly influencing Europe. Thankfully, the French elections did not result in the expected shift to the right, but a strong move to the left is not necessarily better either.

The UK election will bring some stability to their ecosystem. We will have to see about the US election. Overall, the economic landscape in Europe has been challenging since at least 2016, starting with Brexit and the election of Trump. Since then, many unexpected events have occurred, making this the new normal. SME business owners either need to get used to it or already have.

In 2017-2018, many hesitated to innovate or invest in their businesses, but you can’t push back investment indefinitely. We need to adapt to this environment. The good thing about SMEs is their diversity. No matter the economic situation, some SMEs will do well while others may struggle. Our job is to identify and support those sectors and SMEs that continue to thrive using data-driven decision-making.

The role of SMEs will not significantly change in the next five to ten years. SMEs have always been the backbone of the European economy, and they continue to be a solid focus for investment and support.

Question: What do you see as the major challenges these SMEs are facing? And how can digital services like smeGo help them address these challenges?

Answer: There are many challenges that SME owners face, especially when we talk about owner-managed businesses where they don’t have big teams around them and focus mainly on what they’re good at, which is their business. The world is changing at an ever-increasing pace, and it’s hard for an SME owner to keep up with everything while still running their business. Our job is to simplify at least the financial services side of their business. We must offer simple products they don’t need help understanding and with an easy user experience and straightforward communication. The information they need should be at their fingertips so they can concentrate on what they do best, which is running their business. Our job is to empower them to do so.

Question: How do you foresee the evolving relationship between large systemic banks, which you mentioned before, and fintech companies? Do you see the banks and fintechs as partners or as competitors?

Answer: I think banks, especially large systemic banks, are crucial to our global financial ecosystem and need to be there. They play a significant role. However, large banks don’t particularly serve SME clients very well; it’s not their core business. Having worked in large banks, it always felt like they didn’t value the SME client base much. Large banks usually have two business units: retail and corporate. The retail teams focus on large customer numbers and making small changes to the same product to reach millions of clients, which doesn’t align well with the smaller number of SME companies. On the other hand, the corporate teams get excited about large, complicated transactions, like 300 million club deals or billion-euro bonds. They aren’t interested in small deals, like a 200,000-euro commercial mortgage.

As a result, neither group really loves the SME segment. When I was at Barclays, we constantly swapped the SME segment between corporate and retail units every two to four years. SMEs often end up with products initially developed for retail or corporate customers and then adjusted for the SME segment. In short, large incumbent banks don’t serve SMEs well and likely won’t improve. That’s where a player like ours, with a real focus on that customer segment, has a chance to excel. We can already see this in the UK, where fintech is more developed and has a higher market share compared to the EU. Over the next four to five years, I believe we’ll see similar developments in Europe, although it might take a bit longer.

Question: Let’s switch a bit to smeGo. You’ve answered some of this already, but in your view, what are the key factors behind our success so far? And how do we sustain this as we grow? A lot of it is the customer relationship. But as you scale, does that become harder to maintain?

Answer: Scaling doesn’t make maintaining customer relationships harder because we already have a digital relationship with our customers. We aren’t meeting them face-to-face and are already operating in five countries. So, the hard part has already been done. However, there are other issues on the scaling side. As for the key factors behind our success, we’ve already discussed the entrepreneurial mindset of our people. The fact that the company has been bootstrapped from day one and has always been profitable is remarkable, especially in a FinTech environment. We make money based on our business, not just by using venture capital and spending it on advertising like many other startups. We create real added value and have a lot of ambition. Our founders and team have a high ambition for what this business can be, which is super important for our drive.

Question: In the recent press release, you mentioned the unique combination of a technology-driven business model and banking expertise. How do you plan to leverage this combination to meet the needs of established SMEs?

Answer: We plan to continue the journey we’ve been on. We must keep building out the bank, which is still fairly new within our ecosystem. We have a lot of work ahead to ensure it aligns with our vision. The journey we’re on is the right one: creating a truly digital bank with a variety of products for SMEs. We are already a one-stop shop for all their financial needs, removing the headache from managing these services. SMEs can get lending products, current accounts, payments, and, in the future, possibly cards—everything they need from one place.

For us, it’s about deciding whether to develop everything in-house or to partner with others for certain smaller use cases. There are opportunities to buy in best-in-class solutions to offer our customers. We don’t need to do everything ourselves, but we are committed to providing the best ecosystem for our customers.

Question: What trends do you anticipate in the SME banking sector over the next five to ten years? And how are we positioned to capitalize on these?

Answer: There are three key trends I foresee. First, even faster decision-making is becoming crucial. We’ve already reached a point where, in some countries, we can make almost instant decisions for small cases, but not yet for larger transactions or in all countries. This journey will continue, especially for bigger tickets and more complex situations, which is essential for our future embedded finance proposition.

Second, using AI is very important in the SME banking sector. AI can enhance relationship management services by handling straightforward customer interactions and helping underwriters make better decisions.

Finally, a more controversial trend is the development of value-adding services. Large banks have tried to develop these for SME clients for years but haven’t succeeded. SMEs historically lacked sufficient data points for accurate predictions. However, with AI development, we can now offer more interesting and beneficial services to SMEs, transforming from a purely transactional bank to a value-adding partner.

We are well-positioned to capitalize on these trends because we have a great product and tech team. A significant portion of our monthly spend is in this area, which is crucial for a fintech business. Additionally, our banking license gives us numerous growth opportunities. Combining these best-in-class elements makes me very positive about our future.

Question: What is your long-term vision? How do you see the company shaping the future of SME banking in Europe?

Answer: Our ambitious vision is to build a Pan-European champion challenger bank for SMEs, eventually operating across all EU countries. Given the scale—27 countries—this will take time, but we will continue to leverage our external growth, add new countries, and expand our product and service offerings. We aim to evolve from a pure lending player to a full-fledged financial services provider, a true neobank for established SMEs. We are already in five countries and plan to add more soon. This means we must internationalize our management and broaden our mindset to transition from a localized player to a Pan-European powerhouse. Our goal is to become synonymous with SME banking, the first name they think of for their financial needs.

Question: Businesses don’t usually think about banks unless there’s a problem. How do we ensure SMEs know us and see the value we offer over their incumbent banks?

Answer: Our job is to ensure they are aware of us and know we can help when their incumbent banks fall short. Unlike other neobanks in the B2B space, which target small businesses at inception, our customers already have established banking services. Our challenge is demonstrating how much better we are than their current banks.

Retail customers are unlikely to switch banks unless there’s a significant issue, and it’s even more challenging for SMEs due to the complexity of their banking setups. However, lending is a critical gateway for us. Solving a significant problem by providing loans gives us the right to offer other transactional banking services. Once SMEs experience how much better we are, they will gradually migrate more of their services to us, creating a flywheel effect with lending as the key entry point.

Question: Thank you so much for your time, Thorsten.

Answer: It’s been a pleasure