Money Matters

How fintech is helping small businesses grow

The fintech industry is a hot topic right now in the business world. Despite the popularity, it’s a term many people don’t quite have a handle on.

Technology companies that are disrupting financial sectors such as mobile payments, money transfers, loans, fundraising and even asset management are part of the fintech ecosystem. Financial services doesn’t just involve the tech world it is making its way into the lives of the tech-savvy and sophisticated customers of today, and this is what fintech does.

Why does Fintech matter?

Fintech is an area that is drastically changing how we live and how we do business. The traditional model of a new business turning directly to its bank and/or a conventional investor is no longer the only way to start a business.

Thanks to new fintech companies, there are several affordable options for entrepreneurs to set-up their business and scale-up.

Crowdsourcing, for example, allows people with big ideas to get funds fast and efficiently from people they have never met. Transferring money across borders is another area that is being reframed by innovators. Those are just a couple of ways in which fintech has made it easier and cheaper to do business. Now let’s take a deeper dive into how fintech is changing the world of small business owners.

How Fintech changing the small businesses world

Despite their important role in the economy, SMBs used to be considered unqualified for funding by financial providers. Traditional banks can be opposed to lending because the loan amounts are small and the activities can be inconsistent. Small businesses can handle financial affairs much easier nowadays and fintech companies have become the bridge between the SMBs and the banks. They can serve SMBs with innovative products and service offerings. In serving small businesses, fintech companies provide the technology and transparency that banks don’t have.

The fintech boom for small businesses is just getting started. The primary barrier to entry into processing card payments has a cost. A recent study from Visa found that if small businesses in 100 cities switched to all-digital payments, these cities could generate $312 billion in revenue per year. By turning a mobile phone into a point of sales system, millions of businesses and individuals now have the chance to manage their cash flow better and take payments.

Four ways fintech can benefit your small business

  • Fintech innovations provide well-being and make small business owners lives a lot easier. Fintech eliminates inconveniences in the way we interact with financial services by reducing wait times, cutting out painful steps in the procedures, removing the need for paper and postage, eliminating recurrent identity verifications.
  • Fintech enhances the security of services. Cyber-security, identity theft and payments fraud are all concerns for businesses. Biometric security options (eye, thumb print, voice recognition) are rising quickly and will make a significant difference to user experience.
  • Innovative customer experiences are not an area that the banks have a good reputation in. Fintech innovators are changing this perception very fast, with the use of innovative user experience design, gamification, behavioral psychology, and more.
  • Connecting eco-systems and sharing (API) data to create powerful insights will also make a vast difference when trying to develop products and services. Due to technology businesses are now able to combine financial profiles with social media data that can be analyzed for future usage.

The rise of fintech has opened a world of new opportunities. Companies can offer more services and for a portion of the price of what it would have cost before. Entrepreneurs and small businesses need to keep up to date with fintech developments as a vital part of their daily life.

Being aware of the latest trends and developments in their industry will help SMBs to stay afloat in a competitive marketplace.