Small and medium-sized or SME businesses are the engine of the economy. They account for two-thirds of all jobs, and they account for 99 percent of all businesses. Despite these facts, banks have been notoriously reluctant to loan money to them, despite the sheer size of the market. That’s why it is so hard for small businesses to get loans. This has opened the door to rivals like fintech firms. Here are four ways fintech is revolutionising business financing.
Greater Customer Service
One way that fintech is affecting the financial sector is in customer service. Financial firms still need trained staff to handle problems and give advice. However, chatbots are starting to take over the answering of routine questions. In theory, they can solve most problems for less than the cost of a human customer service representative.
Expanding Online Banking
Even big banks have had to provide online banking to meet customer demand. You don’t have to go to the bank to transfer funds, and you don’t need to visit the ATM or get your statement to check your bank balance. Online banking allows businesses to transfer money and pay for items at the touch of a button.
Online Funding Options
Online funding options also facilitate the whole process for businesses. Small and medium businesses now have more options available to them, and the process is nowhere near as strenuous as it once was. For example, online business funding brokerage services now give business owners access to tons of alternative lenders at the touch of a button. You can shop around for a better rate with mainstream and alternative lenders, and don’t have to schedule appointments with inquisitive and sometimes condescending loan officers just to get rejected.
Other services connect business owners with private or institutional investors. This gives small businesses more options for raising money and on better terms. The list of services you can access online is constantly growing. Technology is also evolving to give people access to online banking through whatever device they like. Advances in technology to streamline business processes, too, reducing the time and steps required to get approved. Now you get money faster and with lower overhead costs. Access to funds is simpler, easier, and cheaper. For example, once your loan is approved, you might be able to access the money in minutes.
More Informed Consumers
A growing number of fintech services are there to educate business owners and provide information to customers who are researching options. It may be an AI that helps someone choose the right investment fund or evaluate their financial status relative to the competition. Tools to support compliance assistance are taking off as well. There are artificial intelligence and algorithms that give businesses advice on how to save money. They can now get regular updates from financial institutions and can run the numbers themselves. All of this results in informed, empowered business owners who can make better decisions as far as financing goes.
The financial industry has not evolved as quickly as other industries. However, the fintech industry is fast gaining ground and could sweep up a large portion of the market legacy system are neglecting.