India’s small and medium businesses have been hit extremely hard by the impact of the coronavirus. They seemed particularly vulnerable after the lockdown was extended as they had to contend with reduced demand, disrupted supply chains, and worsening lack of finance.
Now, more than ever, it is vital that SMEs are provided with the necessary financial backing to support their employees, their communities and to give hope to the millions of people who need them to survive.
This is where fintech companies come in. The emerging industry that uses technology to improve activities in the delivery of financial services saw a large-scale acceleration in adoption and growth after COVID-19.
Fintechs focusing on SMEs are stepping in where banks fear to tread. They are also faster, easier, more transparent, and more cost-effective as compared to traditional banking systems.
How do they do it? Most of them use advanced analytics platforms and artificial intelligence to assess transactional and other data to establish a business’ creditworthiness, evaluate risk, and issue loans in 24-48 hours.
The fintechs are many, and include BharatPe, Fyle, ClearTax, JusPay, Khatabook, Kissht, MoneyTap, Money View, Pine Labs, RazorPay, and ZestMoney.
But what other benefits do these fintechs and others like them help SMEs? They can:
- Fuel accelerated digital transformation
- Protect and secure digital channels
- Understand customer businesses and deepen relationships
- Identify customer financial challenges and churn scenarios
- Enable seamless engagement
- Help them stay competitive and relevant
Underserved by traditional financial systems for long, SMEs are seeing a variety of options as fintech companies grow. More and more SMEs are likely to adopt fintech services and grow.
The readiness of small businesses to share data via open Application Program Interfaces (APIs) makes it easier for fintech firms to develop services that cater to specific financial needs and help them grow.
These are the broad ways in which fintechs are helping SMEs survive and thrive despite COVID-19:
1. Setting up ecommerce
Ecommerce is here to stay, and fintech companies offer small businesses easy options to set up online stores to complement offline sales.
With people extremely comfortable working and operating via online channels, an online presence and ecommerce sales are mandatory to reach out to maximum number of clients and prospects.
Often, an online commerce channel can also help drive sales to brick-and-mortar stores, helping SMEs reach even more customers – in their cities and outside.
2. Access to digital lending
Keen to attract more and more SMEs, fintechs companies have reinvented their services and offerings. Apart from allowing small businesses to embrace change by operating online, they also offer access to small and big loans that are offered instantly.
With digital lending, fintechs are empowering entrepreneurs and offering SMEs the chance to grow, create employment, and generate wealth.
People can fill up online applications to get credit ratings checked, assess the amount and rate of lending, and the payback period. Access to digital lending shortens time taken to get finance as compared to traditional banks and can put SMEs on the growth path.
3. Easing payment processing
Demonetisation may have seemed to have been too early for its time, but COVID-19 proved that cashless payments were going to be how most people paid in times to come.
Be it debit/credit cards, UPI, mobile wallets, or net banking, the ways to make contactless payments are many. Small businesses need to move from cash and cheques to cards and mobile wallets, but the owners often cite bulky point of sale solutions and the accompanying problems as reasons not to adopt digital payments.
Many fintechs offer or facilitate mobile payment processing solutions that can enhance ease of doing business and customer experience.
4. Convenience in accounting
Fintech startups can help SMEs with all basic processes, including documentation of all transactions and financial bookkeeping. These processes – manual till now – tended to be prone to errors.
Turning to a fintech can reduce the margin of error and free up time that was earlier used on these processes – time that can now be used to grow the business.
Financial automation solutions can help SMEs save money, time, and optimize available resources.
Accounting fintech helps keep track of personal and business taxes, expenses, payroll and contractor payments, deductions and more. Other digital accounting tools help organise finances and access them from any device.
5. Customer insights and more
Fintech solutions don’t – like all other technology – come alone. They bring along analytics that provide businesses with rich insights into customers.
Analysis of payment processing fintech reveals consumer patterns and provides data about wants, needs, interests, preferences and more. Small businesses can use this data to find leads, target the right customers, and improve marketing and sales.
The convenience of digital payments enhances customer experience, and brings them back for more.
The way forward
SMEs around the world have been hit hard by the COVID-19 pandemic, and fintech startups can provide digital access and enablement to help them survive and thrive.
But the first step to getting there is an online presence – for that is the way ahead. Getting an online presence can makes it easier for customers to find you and for you to showcase your products, lets you market your brand in different ways, build relationships with customers and vendors, and grow your business.
Boost360 can put you on the right path.
