From Saudi Arabia through to Oman, increased governmental and policy focus on scaling established SMEs, and creation of new start-up ventures, coupled with a restrained SME credit market is providing the opportunity for banks in the GCC to seize a "first-mover" advantage and innovate its products and services to tap into SME segments.

The report released by de Kerros & Company Innovating SME Banking in the GCCaddresses how banks can seize the largest untapped market opportunity, strengthen their market share, and deploy new tools that optimize serving SMEs, whilst mitigating risk and operational costs.

"Micro-enterprises and startups can easily access finance and benefit from dedicated support services within the entrepreneurial ecosystem", explains Tatjana de Kerros, Managing Partner of de Kerros & Company and author of the report. "However, existing SMEs who are more likely to scale and exponentially contribute to job creation and economic productivity are being neglected in the Gulf. Banks have a unique opportunity to capitalize on this segment by optimizing financial and non-financial product and service offerings that meet the operational and growth requirements of SMEs, whilst increasing their returns and supporting private sector growth."

With bank lending to SMEs standing at just under two per cent in the GCC according to the IFC, the debate needs to shift away from the lack of credit supply, to how to meet SME demand. Such an approach will increase banking engagement, identify market gaps, and engage financial, private and government actors to better mobilise resources to increase the productivity of SMEs and position them as vital elements of economic growth.