It would indeed be an understatement if I say Fintech has revolutionized the way entrepreneurs the world over conduct business. Traditional ways of doing business have changed dramatically and the future holds much more promise. What’s intriguing is that while Fintech has had always impacted the business world since its inception, it’s only of late that it has started to disrupt the business world.
Traditionally, businesses of all sizes would look up to banks for their banking and capital requirements or sometimes to investors. Needless to say, this led a monopoly and many SMEs had to run pillar to post for basic capital fulfillment needs. New businesses, were seldom turned away in the absence of credit history, collaterals and even multiple years of ITR filings and balance sheets. This made starting up and scaling up a business extremely difficult. Few lucky ones secured sufficient growth venture capital but most perished for the want of capital.
Luckily, crowdsourcing came to the rescue of few innovative investors. Crowdsourcing platforms are a Fintech offering and helped entrepreneurs with innovative, scalable ideas raise capital from all over the world easily. The problem with crowdsourcing, however, is that there is a lot of uncertainty about the crowdsourcing campaign outcome.
Meeting Capital Requirements
When banks turned away SMEs, Fintech companies sniffed a big market opportunity and dived deep in – providing business capital to the small and mid-sized businesses, so far unserved by the traditional banks and NBFCs. Many Fintech companies offer business loans, loan against property, equipment finance loans, commercial vehicle purchase loans to meet the capital requirements of SMEs.
Loan applicants can not only compare loan offers from multiple banks and NBFCs but also apply for loans, get paperless approvals in real-time. The entire process from discovery to loan disbursement takes just a few days and customers can opt to get real-time updates on the status of their applications. This is a refreshing change for SMEs who were earlier made to run pillar to post for loan approvals and timely disbursements.
Getting paid on time has always been a hassle for businesses. With the rise and wide acceptance of PoS machines, payment wallets, online money transfer, cross-border payments, getting paid has never been easier for the businesses. Payments are one area which Fintech has impacted the most and continues to grow.
It was in this decade that Fintech companies realized it’s extremely difficult to scale up payments via costly PoS machines. They turned to an obvious answer- turning mobile phones into payment acceptance machines. Ever since this happened, mobile payments rose substantially and are soon to overtake traditional card payments. By turning a mobile phone into a PoS, millions of businesses worldwide now have the chance to manage their cash flow better and take digital payments, completely skipping the need for hard cash.
When banks made the shift from branch banking to online banking, a set of innovative fintech startups were already working on mobile banking solutions for banks. In fact, tech-savvy banks were the first ones to embrace mobile banking. At the moment, mobile banking accounts for a large chunk of online transactions.
Big Data Analytics
While one set of Fintech companies are working hard to improve customers’ banking experience, a set of companies are silently working behind the scenes, crunch huge amounts of financial data by deploying artificial intelligence, machine learning, big data analytics to help financial institutions crunch data at scale and provide meaningful analytics. This is used to improve customer experience, loan approvals and even improve the financial offerings.
Improved Customer Experience
One important business KPI which traditional banks have overlooked and let down SMEs is customer experience. Anyone who has signed and submitted paper loads of documentation for a simple business loan will easily relate to my point here. Thankfully, Fintech has made documentation paperless, loan approvals and disbursements quicker, eKYC frictionless and all this has contributed to a significant improvement in customer experience.
The Future Ahead
Fintech has opened up newer opportunities for SMEs. While the immediate focus is on payments and lending, in very near future fintech will also enable SMEs to serve a bigger customer base with fewer investments, improve overall customer experience and compete with the bigger corporations.
Fintech is enabling millions of SMEs with technology which was so far the bastion of large corporations. For sure, Fintech is leveling the playing field and improving opportunities for SMEs. If you are an SME owner and want to raise capital for your business then do check out some interesting SME financing options here. From application to approval and subsequent disbursement, Rubique’s team will be on your side. It’s an experience you would not want to miss. Try Rubique’s offering for SMEs here today.