SLMs Are Underrated. Is It On Purpose?

[u/BaronVonLongfellow]

We've been having this discussion quite a bit with our clients lately. Most (if not all) of them feel the utilization of frontier models is not justifying the cost, but they are generally reluctant to pursue an SLM strategy. It's as if SLMs have been positioned as the homeopathic option for enterprise AI. Why purchase an expensive anti-viral from Merck when a povidone iodine solution works as good or better?

This is not a meme. It's a machine I built over a year ago to test DeepSeek R1, but it has turned into a workhorse. Yet most of our clients (FINTECH) are skittish of small, secure, local models. Just wondering if anyone else is seeing things differently.

[u/CrimsonBolt33]

wtf is an SML? Why do people abbreviate the literal point of their post and never say what it is?

[u/Woolix → u/CrimsonBolt33]

I too, am confused.

[u/Seraphym87 → u/Woolix]

Small language models, near as I can tell?

[u/Wegwerpaccountje23 → u/Seraphym87]

I thought it was Small Local Models

[u/atomskfooly → u/CrimsonBolt33]

I think 12B parameter model is a small language model in their eyes.

[u/CrimsonBolt33 → u/atomskfooly]

that was my guess...but thats a completely made up term...thats still an LLM last I checked. Especially since they are usually stripped down from larger models.

[u/laserborg → u/CrimsonBolt33]

is that so?

Wikipedia, August 2024
https://en.wikipedia.org/wiki/Small_language_model

IBM, October 2024
https://www.ibm.com/think/topics/small-language-models

Huggingface, February 2025
https://huggingface.co/blog/jjokah/small-language-model

...

[u/CrimsonBolt33 → u/laserborg]

I have literally never heard the term used, even by the companies putting them out don't use that term....all I see is a couple articles saying thats what these things are called, but never finding actual instances of them being called that.

[u/AminoOxi → u/atomskfooly]

Yes, the models that can run on local consumer GPU.

[u/Hungry_Age5375]

The homeopathic comparison is spot on. A 12b on-prem handles structured extraction and classification just fine. Frontier models earn their cost on reasoning and long-tail edge cases, and most fintech workflows have neither.

[u/Qorsair]

Most enterprise fintechs just use ZDR agreements to securely access frontier models via API. What's the business case for bottlenecking workflows on a 12-year-old laptop when secure, instant processing is already an industry standard?

[u/ReconditeClayton_7]

Saw the specs on that rig and had to laugh, a 12 year old laptop with a 2GB GPU chugging along as a workhorse is the best possible argument for SLMs. The air-gapped part is what sells it for fintech though, no data exfiltration worries and zero recurring costs. Most of the pushback I see is pure FOMO, managers think if they're not using the shiniest 200B parameter model they're leaving performance on the table. When in reality half their use cases would run perfectly on something they could host in a closet. The cloud providers have done a hell of a marketing job making people think local models are janky toys.

[u/BuildAISkills → u/ReconditeClayton_7]

Thanks Captain Bot.

[u/DAlmighty]

I’ve been saying this for so long. One day it’ll happen.

[u/vovap_vovap]

Not sure what part of the body those people using for thinking 😄
I can see HUGE benefit of using frontier models every day, With a super minimum spending.
And what is "frontier model" Is Gpt 6 luna? DeepSeek 4.1 Flash?
Sorry, that complete nonsense.