New research has revealed that SMEs are embracing Artificial Intelligence (AI), with nearly 90 per cent saying they have adopted some form of AI within their business. The research highlights the rapidly growing role the technology is playing in the sector, as well as the changes it could generate.
Research from Paragon Bank found that 50 per cent of businesses said they were likely to replace at least some staff roles with AI or other technology, with just 24 per cent of respondents saying they had no plans to replace staff.
Industries in which SMEs said they were most likely to reduce headcount due to AI adoption included information and communication (68 per cent), finance and insurance (62 per cent) and manufacturing (53 per cent).
89 per cent of respondents said that some form of AI was already used within their business, with the most common functions including data analytics and decision-making (cited by 36 per cent), operations and process automation (33 per cent), customer engagement (32 per cent) and marketing (28 per cent).
SMEs using AI have reported measurable gains, particularly in terms of reduced operating costs (30 per cent), improved productivity (36 per cent) and better data management (31 per cent), with the increasing embrace of the technology coming at a time when businesses face pressures such as mounting costs.
30 per cent say they are adopting AI, automation or new technologies in direct response to operational and employment cost pressures. Others, however, say they are using technology to explore new markets, simplify supply chains and seek alternative financing routes.
John Phillipou, Managing Director of SME Lending at Paragon Bank and Chair of the Finance & Leasing Association, commented: “Working with more than 16,000 UK SMEs gives Paragon a clear view of the resilience and adaptability that define Britain’s small and medium-sized businesses. That spirit is evident in how quickly AI is moving from concept to practical application across the sector.”
“What stands out from this research is the pace at which SMEs are embracing AI. It’s no longer seen as a ‘future technology’, but a practical, productivity-enhancing tool that is already helping firms cut costs, make smarter decisions and serve customers more effectively. Doing so amid ongoing cost and labour pressures is a testament to their agility and responsiveness.”
“As AI becomes more embedded in business activity, Paragon remains focused on providing the financial support businesses need to invest in the technologies that can drive the next phase of economic growth.”
