By Dr. Martin Hess, Chief Economist and Head of Economic Policy at the Swiss Bankers Association

Switzerland is one of the world’s foremost innovators: the nation has topped the World Intellectual Property Organization’s Global Innovation Index for 14 years in succession. It also has a well-earned reputation as a leading global exporter. Goods exports account for some 50 percent of economic output, while the trade surplus stands at almost 50 billion dollar. Adding in service exports – a substantial proportion of which are attributable to banking and financial services – foreign trade is responsible for nearly 70 percent of gross domestic product.

Switzerland’s more than 618'000 SMEs are the backbone of the nation’s economy and are crucial to innovation and trade. They employ more than three million people and are a key pillar of Swiss prosperity.

Bank Financing is Central to Success

For a large number of SMEs, access to external sources of financing is vital. Many use tailor-made financing solutions offered by banks. Corporate loans, which are very cheap by international standards, are essential to the success of SMEs and therefore Switzerland’s competitiveness.

According to SECO, 32 percent of SMEs had bank financing in 2021. This includes bank loans, overdraft facilities, mortgages and export finance. Despite the spread of online financing platforms, the proportion of SMEs with bank financing has remained unchanged since 2016. The volume of lending to SMEs rose from 289 billion francs to 403 billion francs between 2016 and 2024. According to figures from the Swiss National Bank, some 90 percent of the total volume of domestic corporate lending was to SMEs, underscoring their close partnership with banks.

The importance of bank financing depends greatly on the branch of the economy in which an SME is active, its size, and the importance of its export business. According to a 2021 SECO study, almost 50 percent of industrial SMEs and 54 percent of SMEs with between 50 and 249 employees had sought funding from a bank. Among micro companies with fewer than 10 employees and service-sector SMEs, the proportion was around one quarter; the demand for bank financing also rises with increasing dependence on foreign markets and the share of production that is exported.

Hurdles in the Credit Process Holding Back Potential

Some 97 percent of bank loan applications from SMEs are approved, a reflection of their high quality. However, stringent quality requirements and what many SMEs see as an overly complex credit process are highly demotivating. As a result, up to 10 percent of SMEs do not apply for financing in the first place.

Banks demand large volumes of documentation, from financial indicators to strategic planning documents, which imposes a heavy administrative workload. Putting them together takes time and business know-how, and ties up staff resources, pushing smaller companies in particular to their limits. In consequence, many SMEs that need financing do not even bother applying for a loan, which limits their growth potential and innovative capacity.

Greater Simplicity Thanks to Artificial Intelligence

Banks therefore need to simplify the loan application process. Targeted use of artificial intelligence (AI) could make life much easier for SMEs. AI can act as an advisor, for example answering questions about the loan application, helping with the preparation of necessary documentation and so guiding applicants through the entire process. For banks, AI allows for automated assessment of loan applications, consid-erably reducing processing times. This means that SMEs receive qualified feedback more quickly, giving them greater planning certainty and making the financing process more efficient for both sides.

Overall, the targeted use of AI in the SME financing process can remove hurdles and make access to funding much simpler. This creates real value added for both SMEs and banks, and can potentially boost the Swiss economy’s innovativeness over the long term.

This text is an abridged version of a guest contribution by the Swiss Bankers Association that was pub-lished as part of the IFZ study «SME Banking 2025». You can find the study (available in German only) and further information here: SME banking study: making the credit process simpler for SMEs