Fintech solutions’ roots get traced back to the late 19th century. Since then, this industry has grown up. The previous decade observed a rapid growth in Fintech solutions. The trend is likely to be followed in the next decade as well due to the ease, functionality, and value it provides. This industry has become something big which has the power of transforming businesses in a way the world has never seen before. The biggest driver of its growth is its potential to revolutionize the global finance. This innovation forces the traditional firms to entirely transform their way of doing business and come up with new cutting-edge solutions that are more effective, productive, and customer-centric.
This industry has grown to the extent that it has its own Festival, named ‘FinTech Festival,’ which celebrate in Singapore. In 2018 it attracted around 45000 participants from 130 countries. According to the 2018, FinTech Festival report the international participation was 58%. It is a massive participation for a newer gathering like this. Along with the USA and the UK, China, India, Indonesia, Thailand, Philippines, Vietnam, and Japan were amongst the top 10 participants. This Festival has shown that after becoming a great success in western countries, Fintech is going to be huge in ASIAN countries as well, where this industry will be a part of a booming market.
SMEs’ which contributes to a significant part of any country’s GDP, are becoming a big part of FinTech revolution because of the low cost, transparent and inclusive approach of these solutions. These innovative Financial technologies are helping small businesses get established, run, and thrive in a cut-throat competitive global market. For instance, Grab is a Singapore based well-known app in the southeast Asian countries for ride-hailing and was limited to that feature only. In July 2018, CEO Anthony Tan announced a new service, Grab Platform. Grab Platform connects travelers to Airports, Retailers, Restaurants; it even works as a way-finder. In an interview with Bloomberg, Mr. Tan said that he wants Grab to become an “Everyday Super-App” that helps millions of users carry out daily activities. Among the customers, there are many small businesses listed on the app, which gets directly connected to this enlarged circle of potential customers. With the proper use of Fintech solutions, small businesses can finance, manage, and secure their businesses effectively while building a healthy relationship with their customers.
Here are the top five ways in which FinTech solutions are helping SMEs:
Financing: In not too distant past, businesses had to follow along and tedious process to get funds. This process usually involved a bank, a lending institution, or an investor. For funding, these small businesses had to lend money on interest, which used to come with a lot of pressure and unnecessary costs. Moreover, if the amount was too low, then there was no way to get the funds from the big lenders and investment institutions. Borrowers had to come out clean on the criteria of the bank, lending institution, or the investor. But in 2009, Kickstarter came into the picture and changed the whole scenario with its innovative, reward-based crowdfunding program; after that, one after another, much crowdfunding and P2P lending platforms emerged. Now, these platforms are helping small businesses to connect with potential investors directly. Investors are also getting a plethora of opportunities to invest and make money at a rapid rate.
Payments: The emergence of cashless economies has given rise to payment systems equipped with the latest technology. It is where Fintech solutions come in handy. A large population of the world uses debit or credit cards to pay, but now alternative payment systems like e-wallets and e-currency is the next big thing. Customers nowadays don’t want to carry around bulky wallets in their pockets. Some people don’t even prefer cards. These E-payment systems have improved the cash flow SMEs are having. Collecting payments online gets the money faster to businesses compared to traditional payment systems. It also prevents fraud and accounting errors. Apple pay, PayPal, Square are some of the most prominent examples of innovative payment systems.
Accounting: FinTech solutions have changed the way small businesses used to go about accounting. Companies can save on accounting costs because of the simple, user-friendly interface Fintech solutions provide. Moreover, data visualization helps in keeping track of the funds and then interpret the trends has become easier than ever before. This feature has given the power of nearly accurate forecasting to the business owners in a real-time. So that they can make adjustments before things go catastrophic. Budgeting and resource management are the areas where small businesses, especially the ones which are in a nascent stage and don’t have much experience, can go wrong big time. Now there are AI-enabled tools to create automated cash flow forecast and credit control. Budgeting has become easy and less time-consuming. Sage Accounting, a leading online accounting software, provides small businesses with another version of it called Sage Peachtree, which gets tailored while keeping in mind the needs of SMEs. It can do a lot for small businesses, ranging from the simplest accounting tasks to complex managerial calculations.
Customer Engagement: Taking a customer-centric approach is critical to gain a substantial competitive advantage in the market. SMEs can have this advantage with the use of rapidly growing FinTech solutions. These solutions are providing SMEs with tools that can improve customer engagement and relationship with the brand in a more peculiar way. The payment systems can be tied up with customer profiles so that customers information get auto-filled in to avoid cumbersome task for many people. FinTech solutions, coupled with other web-based CRM systems, can help businesses providing a seamless experience to the customer. SMEs can also have the benefit of knowing their customer better. FinTech solutions are capable of populating a real-time data for every customer that helps to analyze the customer’s spending habits so that the product can push more effectively.
Profit Maximization: From the easy funding process to faster payments, steady cash flows, more accurate forecasting, effective budgeting, and satisfied customers, FinTech solutions are bestowing small business with much more significant and stable profits. Traditional banks charge hefty fees to even transfer the money, let alone the funding and loan process. In a press conference, Lawrence Yong, CEO of Singapore based digital lending platform, said,
From day 1 our focus has been to simplify and speed up access to working capital for SMEs. With MAI, we envision our nimble and responsive credit engine that is self-learning and self-correcting.
FinTech solutions are the most cost-effective way to go for small businesses. The other valuable asset these solutions are saving is time. Now with the easy automated process, management can shift its attention to the areas where it is needed the most.
The Road ahead: According to Susanne Chishti, CEO of FinTech group Funding circle, these new FinTech tools will help entrepreneurs grow their businesses, rather than bogged down with financial issues. Potential with emerging technologies such as big data, blockchain, and biometrics are limitless. More significant traditional institutions will also have to go with the flow and use these solutions in some capacity; otherwise, they’ll get lost in the race. As for SMEs, the future seems to be bright and secure, where the opportunities are limitless.