Within the last few months, a certain customer segment has attracted a lot of attention in the Fintech sphere: Small and medium-sized enterprises (SMEs) have been identified as a group that has been neglected by traditional banks for a long time. As a result, a growing number of Fintech companies enter the market, offering products and services that have been specifically tailored to suit the needs of SMEs - needs, that due to digitization and globalization have changed in the last two decades. Banking products, however, have changed only by a small amount and in many cases were not adjusted according to a changing environment.
In order to survive in today’s highly competitive markets, SMEs are required to be flexible and efficient. Thus, Fintech companies stepped up to simplify and accelerate financial products and services for SMEs in the following market segments:
Banking & Accounting
Accounting departments in SMEs often use a variety of different tools. Having to deal with several licences, interfaces and data is consuming time as well as financial resources.
That is why Fintechs have started to develop fully digital solutions that enable businesses to manage their finances, invoices and bills more efficiently.
Getting credits from traditional banks can be quite difficult and time consuming. In addition, handling times are often very long which has a direct impact on the businesses’ financial flexibility. Newly developed solutions that have been specifically created to fulfill the needs of SMEs do not only solve the problem of a long handling time but also simplify the application process and at the same time increase its transparency.
Supply Chain Finance
The financial flexibility of businesses can also be maintained with the help of factoring services. Especially when capital is needed to grow a business, delayed payments or long payment terms in contracts can have a negative effect on the liquidity of a company. While the factoring process itself is not an innovation, the solutions that have been developed by Fintechs can most certainly accelerate the factoring process and handle it with a higher cost efficiency. BillFront, for instance, provides factoring services for digital media companies, in particular targeting ad-tech companies.
Like any other businesses, SMEs have to deal with debtors. While the methods of traditional debt collection companies are not only expensive but also likely to damage or even end customer relationships, Fintechs have refined the process of debt collection by approaching the customers in different ways and on different channels. One Fintech company that has developed a new approach of debt collection is Pair Finance. The company is contacting debtors via digital channels and bases its communicational efforts on insights from behavioral research and machine learning. As a result, debtors respond quicker and are more likely to pay their bills. In addition, the debt collection process is less expensive than traditional approaches.
These are only some examples for fields in which Fintech companies are focussing on the needs of small and medium-sized enterprises. The influence of artificial intelligence, machine learning and big data will change businesses and their respective opportunities and needs even more. Hence, it is likely that Fintech companies will intensify their efforts to provide solutions that will enable SMEs to optimize processes and, therefore, increase their performance.