In the current transforming digital world, financial services with the help of digital technologies are changing core behaviors reshaping global businesses and creating a new world of opportunities for small and mid-sized businesses. Fintech, a portmanteau of financial technology, is the creation of financial products and services incorporating technological advancements. Business often uses technology to enhance and automate financial services and process. Here are a few application areas
- Banking & Lending
- Cryptocurrency and blockchain
- Investments and savings
- Machine Learning
During economic downturns, small and mid-sized businesses are the ones taking the maximum hit due to small cash buffers and dependency on external capitals. However, fintech has come to rescue small and mid-sized businesses by offering
Stealing Banking Market: For a long time, banks are the pivotal lenders financing these businesses by processing their loan application and disburse funds. Moreover, their response and processing time is too slow affecting these businesses. Fintech sensed this opportunity to step in by providing faster loan payments and reduced processing time giving them a better experience than banks. With technical advancements, fintech lenders are equipped with essential tools to bring in the change to existing lending options. Ondeck, PayPal, and Intuit are the first few fintech lenders approved to participate as direct lenders.
Carving Business Model: One or the other, FinTech is finding ways to serve even the smallest businesses to help them sustaining profitable business. Partnering with fintech or building in house projects with fintech helping these businesses in their operating margin which in turn helps them to achieve a higher profit margin. Big players having huge customer bases like Amazon and Netflix have adopted D2C i.e. direct to customer approach to launch various their product and services directly to customers, SMEs are now adopting D2C with the help of fintech. This has significantly reduced middle man dependency and time to market. Such strategy necessarily requires a change in the business model to give them breathing space.
Technological Ecosystem: In the like of technologies like artificial intelligence, big data, and other deep tech that are proving their worth across industries, fintech is no more different. A debt-financing platform that facilitates SME lending, payment solutions like Razorpay, leading financial exchanges by EbixCash, API-based bank-as-a-service platform, etc. are few platforms having a vision of frictionless enhanced customer experience backed by technologies for SMEs. Automating real-time data across different steps is surely a 360-degree view for both customers and SMEs which is impossible without technological advancements and development companies focusing on financial sector.
Ecommerce Integration: Brick and mortar are only half the story for SMEs. Traditional ways of selling are good but small and mid-sized businesses have observed significant revenue growth going online. These days people spent most of the time online on social media like Facebook, Twitter, YouTube, Instagram, etc. where businesses can display verities of Ads to promote their products and services. It increases their online presence in a global footprint creating brand awareness. AI-backed predictive analytics of Ecommerce gives them an opportunity to analyze data sets and historical buying patterns to tailor their current and potential products and services. Along with this, payment integration is another way to provide the user, a seamless ordering experience.
As the wave of fintech is rising, it is surely going to dominate the consumer market in the near future. As said by, Slava Solodkiy, Managing Partner at Life.SREDA, a Singapore-based VC firm that has invested in the likes of Fidor, Moven, Simple, and Anthemis, says “fintech for SMEs is booming right now and demand for ‘Simple banks for entrepreneurs’ will rapidly [increase] during the current year.”