In 2025, small and medium-sized enterprises (SMEs) worldwide are facing a significant challenge as major banks gradually withdraw their services. This process, known as “de-risking,” has resulted in account closures, blocked transfers, and the exclusion of certain industries, raising alarms about the future of global SME financing.
The origins of this trend trace back to the aftermath of the 2008 financial crisis. Regulators imposed strict measures to prevent systemic failures, including enhanced anti-money laundering (AML) and counter-terrorist financing (CTF) standards. Banks were required to conduct rigorous due diligence, know-your-customer (KYC) checks, and transaction monitoring. While these reforms strengthened oversight, they also increased operational costs. For multinational corporations, the costs were manageable, but for SMEs, the compliance burden often outweighed potential revenue, making them less attractive clients.
De-risking has become the practice of reducing exposure to certain clients or regions, not necessarily because of misconduct, but because the compliance effort is deemed too high. Behind the technical language of compliance are real-world consequences. European exporters, Latin American retailers, and Asian tech consultancies have all experienced disrupted operations, delayed payments, and terminated accounts. Freelancers and digital nomads also face hurdles in receiving international payments, affecting contracts and income stability.
Regionally, SMEs face varied impacts. In Europe, cross-border transactions face growing scrutiny, affecting exporters and fintech firms. In Africa, local banks are pressured by international partners to cut ties with small institutions, isolating businesses from global markets. In Asia, de-risking hampers SMEs’ ability to engage in the digital economy. The result is limited access to capital and increased operational challenges for small businesses, particularly in developing regions.
As traditional banks retreat, fintech platforms and electronic money institutions (EMIs) have stepped in, offering multi-currency wallets, rapid onboarding, and global reach. However, these alternatives often come with higher fees, lack deposit insurance, and depend on market confidence rather than systemic guarantees. SMEs using multiple EMIs face fragmented operations, higher administrative costs, and uncertainty regarding long-term stability.
The systemic implications are profound. SMEs represent over 90 percent of businesses worldwide and contribute significantly to employment and economic growth. Marginalizing them threatens supply chains, innovation, and economic resilience. Paradoxically, de-risking intended to reduce financial vulnerabilities may push SMEs into less regulated channels, creating new risks. Peer-to-peer payments and decentralized finance solutions are already emerging as workarounds, raising questions about oversight and consumer protection.
The de-risking dilemma highlights how well-intentioned regulation can have unintended consequences. While banks comply with complex global rules, SMEs—the backbone of the global economy—face increasing isolation. Fintechs provide stopgap solutions, but without equivalent protections or stability. Striking a balance between regulatory compliance and the needs of SMEs is essential to ensure that these vital businesses can continue to thrive in the global financial system.
