Since its founding, Lithuania’s SME Bank has committed itself to promoting entrepreneurial growth by providing a broad array of banking and lending services specifically designed for small and medium-sized enterprises (SMEs). Its founders, driven by their firm belief in the potential of these businesses, sought to create a neobank that would provide them with opportunities for development and expansion. The bank’s model emphasises speed, flexibility and personalised decision-making, enabling companies across multiple industries and diverse regions to access financing that supports growth, innovation and sustainability. SME Bank excels at providing products and services that enable SMEs to manage their finances and secure crucial funding.

This customer-centric strategy has allowed SME Bank to steadily expand its presence in Lithuania’s financial sector. Licensed by the European Central Bank (ECB), the bank has established itself as a modern alternative to traditional banks by combining digital efficiency with a strong understanding of local business needs. Industry reports indicate that SME Bank has substantially increased its market share, making it one of Lithuania’s leading specialised banks. Its management has consistently prioritised efficient, stream-lined financing processes and enhanced cooperation between financial institutions and public agencies to better support entrepreneurs in obtaining funding. The bank has actively partnered with public sector financing programmes to improve SMEs’ access to capital. It acts as a “high-speed distribution engine”, ensuring public and private capital reaches worthy businesses.

International Banker was pleased to sit down with Thorsten Seeger to learn more about how SME Bank exemplifies a specialised, technology-focused financial institution intent on fostering economic development by serving as a bridge between available capital and SMEs.

How significant would you say the current financing gap for small and medium enterprises (SMEs) is in Lithuania and more broadly across Europe, and what are the main factors contributing to this gap? How does SME Bank’s business model specifically address or bridge this shortfall?

The credit gap is moving, and the battleground for 2026 has shifted to established SMEs and the mid-market. While many fintechs focus on micro-SMEs, the structural debt financing gap in the European Union (EU) remains a staggering €39 billion per year. Lending conditions for SMEs in Europe have continued to tighten due to a combination of lower risk tolerance among banks and a fragile economic outlook.

We are currently seeing a liquidity paradox: There is a wall of money available, including the EU’s new €28-billion EastInvest Facility launched in February 2026 to support regions bordering Ukraine, belarus and russia. The real bottleneck isn’t a lack of capital; it is a lack of digital distribution rails. SME Bank bridges this by acting as a high-speed distribution engine, ensuring public and private capital doesn’t just sit on balance sheets but actually reaches the market where it can drive growth.

Does operating as a digital neobank give you a structural advantage in the SME financing space compared to traditional brick-and-mortar banks?

Absolutely. Our structural advantage is built on analytical agility. Established SMEs present complex variable risks that traditional banks find too messy to automate. Our advantage lies in our ability to process and model these diverse data points at speeds traditional systems cannot match. We don’t see complexity as a hurdle to be avoided. We see it as a data-rich environment in which our tech stack allows us to find creditworthiness where others see only noise.

Furthermore, traditional banks face high recurring costs for loan origination, particularly for specialised products such as green loans. As a digital neobank, our lower overhead and tech-first infrastructure allow us to scale through niche precision and targeted distribution rather than broad market volume alone.

Where do you see your primary sources of competition originating – from other digital banks, traditional financial insti- tutions or both? How do you strike the right balance?

Our competition comes from two distinct fronts. We compete with traditional banks for established clients and fintechs for agility. However, we occupy a unique growth-champion space. We are seeking external capital to accelerate our build into a truly pan-European champion.

We balance agility and stability by main- taining our ECB (European Central Bank) license, which provides the trusted capital SMEs require, while avoiding the rigid constraints that curb innovation in large organisations. In 2026, the winners won’t be generalist lenders but those who believe in vertical lending – specialised niches such as tech or green energy that traditional generalists struggle to serve.

A prime example of this is the security and defence sector. Despite the shifting geopolitical landscape, many traditional banks still view this industry as too risky or incompatible with their ESG (environ- mental, social and governance) frameworks. This has created a massive financing gap where innovative, ethical firms cannot even open a bank account, let alone secure a loan. At SME Bank, we treat defence- sector financing like any other strategically important industry: by taking a case-by- case, data-driven approach. By developing expertise in these specific verticals, we adapt our risk parameters to improve the sector’s access to financing.

What role do data, technology and innovation play in helping SME Bank to both close the SME funding gap and better serve underserved SME segments?

In the past, the funding gap was often just an information gap. Traditional under- writing is a blunt instrument; it struggles with the nuances of a modern, fast-moving SME, often leading to a “no” simply because the manual cost of due diligence is too high relative to the loan size.

At SME Bank, we use technology not just for speed, but also for greater precision. Innovation for us is defined by three shifts. Rather than relying on a snapshot of a balance sheet from 12 months ago, our analytical tools integrate operational data. This allows us to see the fundamental health of a business, its cashflow cycles and contract pipelines, providing the clarity needed to fund viable SMEs that legacy systems overlook as too complex.

We also use data modelling to bridge the collateral gap. Innovative SMEs often lack physical assets but possess high intellectual or operational value. By accurately pricing this specific type of risk, we can effectively deploy public guarantees, such as those from the European Investment Fund (EIF), turning unbankable firms into high performing portfolios.

As SMEs increasingly expect financial services to be seamlessly embedded within their day-to-day operational software, how is SME Bank responding to this trend?

The shift toward embedded finance is reshaping expectations, but we must be realistic: The industry is still in the transi- tion phase from manual to truly seamless. SMEs are clearly fatigued by bureaucracy, especially as late payments from private entities continue to squeeze the liquidity of nearly half of EU SMEs.

At SME Bank, we respond to this trend not by claiming perfection, but by relentlessly narrowing the gap between a business need and a financial solution. Our approach is built on three pillars.

First, we are moving away from being a destination and toward being a utility. By integrating our lending and treasury tools into the digital ecosystems SMEs already inhabit, we aim to provide financing options as close to the point of transaction as possible.

Second, we recognise that for many SMEs, we are the agile partner alongside a traditional bank, at least for the time being.

We are focusing our embedding efforts on specific pain points, such as crossborder cash flows and currency risks for active exporters, allowing them to manage these complexities without leaving their primary operational tools.

Third, we believe the winners in 2026 will be those who embed the deepest. Our goal is to move beyond being a mere credit provider and into the role of an operational partner. This means using data from an SME’s own software to offer contextually relevant support, even if the “instant” ideal is still a work in progress.

The bank’s survey data suggests a decline in SME profitability relative to larger firms, alongside a rise in corporate bankruptcies. How does this caution translate into formal risk management practices?

We are navigating a financial landscape where profitability shows concerning trends. In the EU, more than a third of SMEs say their net profits are decreasing, and only about one-fifth say their profits have increased. Cost pressures remain acute, with 59 percent of SMEs reporting increased labour costs and 60 percent reporting higher production costs.

This has been further compounded by the 2026 crisis in the Middle East, which triggered a significant energy shock across Europe. Although benchmark oil prices have eased from their spring peaks, they remain highly volatile and structurally elevated compared with last year. As a result, SMEs continue to face a severe and prolonged cost push squeeze on their operating margins.

Our caution involves moving away from static annual reviews toward dynamic monitoring. While the rejection rate for SME loans has climbed to 10 percent across the eurozone, our tech stack allows us to differentiate between firms hit by tempo- rary cost shocks and those with fundamentally broken models. We focus on niche precision by using data to ensure lending remains safe even when the broader macro- economic outlook is negative.

Based on your experience, SME clients often prioritise fast, transparent and hassle-free access to credit. How does SME Bank consistently deliver this speed while maintaining robust risk management?

We deliver speed by removing the paperwork hurdle, which some SMEs still cite as their primary barrier to financing. Our data aggregation allows us to provide a decision within hours while maintaining the rigorous credit standards of a fully licensed bank.

This is particularly effective for the 61 percent of SMEs that still expect growth despite the current volatility; they need a partner that can move as quickly as their opportunities do, without compromising the security and trust that an ECB-licensed institution provides.

Demand is growing for service personalisation. How does SME Bank approach this, and which specific initiatives have proven most popular?

Personalisation in 2026 is about moving beyond “one-size-fits-all” lending and understanding the specific lifecycle of an industry. For us, personalisation means aligning our risk appetite with the SME’s strategic goals, such as energy independ- ence or digital transformation.

Our successful initiative in this area is sustainability and climate action financing, backed by the European Investment Fund (EIF). A prime example of this “deep personalisation” is our partnership with Saulės Grąža, one of Lithuania’s leading green energy firms. By leveraging the InvestEU programme, we provided Saulės Grąža with a €2.5-million loan with a 10-year maturity. This financing is structured to support the installation of an additional five MW (megawatts) of solar capacity across Lithuania, enabling at least 500 households to transition to sustainable energy.

Another initiative is our partnership with Axiology, which will give SMEs access to debt capital markets. Axiology uses distributed ledger technology (DLT) to provide an integrated infrastructure for issuing, trading and settling securities. This partnership allows our clients to bypass expensive intermediaries and issue digital bonds across the entire European Economic Area (EEA). By offering an alternative to traditional loans, we help SMEs build credibility with institutional investors and diversify their funding sources via a seamless, digital-first capital market rail.

SME Bank has positioned itself as a trusted advisor. How do you maintain insight across industries, and do you believe artificial intelligence (AI) can replace a relationship manager (RM)?

At SME Bank, we believe in humans supported by technology. While AI is essential for modelling complex credit risks in the mid-market that were previously handled manually, the human touch remains non-negotiable for mid-market clients.

Our technology simplifies the financial-data side, but our specialist teams provide the sector-specific expertise required for high stakes decisions. We hire for deep knowledge of verticals such as tech or green energy, ensuring our lending is grounded in the reality of that specific industry’s cycle. We use AI to amplify our relationship managers, not to replace them.

To what extent do you see automation as a potential limitation when it comes to preventing financial crime?

Automation is not a limitation; it is our strong shield. Automated KYC/AML (know your customer/anti-money laundering) processes cross reference global databases with a precision that manual checks cannot match. However, the rise in geopolitical risks and conflicts necessitates a human approach for high risk jurisdictions. Automation handles the vast majority of standard onboarding, allowing our compliance experts to focus on cases that involve complex ownership or high risk sectors, ensuring we meet high regulatory standards while maintaining a seamless user experience.

How do you plan to scale your operations across Europe without a physical presence, and how do you convince SMEs to switch?

Since 89 percent of SME exporters trade within the euro area, a pan European digital platform is their most natural partner. We convince SMEs to switch by solving the big bank’s bureaucracy. When an established firm realises they can bypass the fragmented rules that hinder exporters, our proposition becomes the obvious choice for their growth.

While we are a digital neobank, our growth strategy is built on a high tech, high touch model. We scale by deploying local relationship managers in every market we serve. These experts understand local regulatory nuances, cultural business etiquette and specific regional pain points. Our clients get the speed of a neobank but the dedicated attention of a professional who speaks their language and understands their market.

Finally, we don’t necessarily aim to replace an SME’s primary bank immediately. As a first step, we see ourselves as the essential second bank. In today’s environment, a second bank is no longer a luxury but a necessity for oper- ational reliability. By having a digital partner like SME Bank alongside a traditional one, an SME ensures business doesn’t stall due to technical glitches or slow bureaucracy.

Once an SME experiences our 24-hour decision-making and local RM support, the relationship naturally deepens. Our goal is to demonstrate such high levels of reliability and integration that the company gradually migrates all of its banking services to us. What begins as a backup for a single credit line evolves into a full-scale partnership where we handle their entire operational flow, from treasury to international payments.

How important is strategic leadership in supporting SME Bank’s regional growth ambitions, and how is it being demonstrated?

While many institutions are retreating into a defensive crouch due to geopolitical volatility, we see leadership as the willingness to lean into the segments and markets that will define Europe’s competitive future.

We recognise that no single bank can bridge the EU funding gap alone. Our leadership is demonstrated by our role as a bridge builder between public capital and private enterprise. By proactively partnering with organisations such as ILTE in Lithuania, Finnvera in Finland and the European Investment Fund, we are creating a unified front to improve credit access across the Baltic and other European regions.