The world of traditional banking is ripe for disruption and we’re finally starting to see that play out. The FinTech industry has taken aim at the status quo. They are showing us that with some fresh thinking and new technology, the financial system can be significantly improved.
FinTech’s core idea is making financial services more accessible, approachable, and efficient. We’ve seen this accelerated recently as the global pandemic has forced consumers to rethink how they engage with financial service providers. Instead of going into a branch, customers are moving to online channels, mobile apps, and other new forms of customer interaction.
For small businesses, these new forms of finance are exciting new avenues to support their growth and scale. For those who can adapt to the new normal, they’ll find that this technology acts as a key leverage point for long-term growth.
In this vein, let’s look at 7 key FinTech trends that should be front of mind for all small business owners.
FinTech solutions are no longer mere gimmicks. They are becoming the most important force in the financial system as a whole.
Are you Ready to take your Small Business to the Next Level with these Trends?
They will transform the way businesses operate as the new normal has embraced new customer and safety behaviors across all industries.
In 2021-22 it is predicted that most of the budget will be spent on automation of services, delivery and marketing.
7 FinTech Trends that are taking the World by Storm
1. The Rise of Alternative Lending
In years past, small businesses were forced to beg and plead with banks to access the financing that they needed to grow. Getting a bank loan remains a very difficult proposition for a company that cannot meet the stringent requirements set by the banks.
FinTech lenders have sprung up in their droves to help here, offering more flexible, efficient, and timely financing options for small businesses of all kinds. In today’s world, you aren’t limited to just a few banks. You actually have a wide variety of different options that you can select from – depending on your circumstances and your needs.
These could include working capital finance, trade finance, invoice finance, SME bonds, and so much more. Each of these new product verticals offers a fresh take on fundraising in a way that works for you.
2. Mobile Payment Options
Another area of FinTech that has boomed in popularity is the world of mobile payments. Culturally, consumers are becoming much more comfortable with using their phone or e-wallet to make payments. And small businesses that can enable these payment methods will benefit from this change in consumer behaviour.
The payments of the future will be vast and diverse, allowing each consumer to choose what works for them. This only bodes well for small businesses that want to reduce as much friction as possible for their customers.
The more payment options you can offer, the more customers you’ll be able to serve.
3. Advanced Analytics
Thanks to advancements in data science and machine learning, companies of all sizes are getting a better grasp on their data and what it can do for them. The ability to derive key insights from customer data and link them to purchasing behaviour creates a treasure trove of information. All of which can improve overall decision-making and transform your business for the better.
This will continue to improve over time and small businesses who get into this early will have a major advantage over those who don’t.
4. Short-Term Business Finance
By removing a lot of the friction in the financial system, FinTech providers are able to offer short-term finance options that just aren’t possible with traditional providers. Sometimes all a small business needs is a small bridging facility or working capital finance to get them through a temporary cash crunch.
FinTech allows them that opportunity without locking them into onerous contracts or long-term financing that they don’t need. This flexibility is worth its weight in gold.
5. Alternative Credit Models
FinTech providers have worked hard to develop products that can get around a lot of the red tape that exists in lending. We’ve seen new credit models emerge that look at metrics and performance indicators that are specifically suited for small businesses. These lenders understand the struggles of running a small business and have crafted solutions specifically designed for those companies.
This is a big step forward in getting small businesses the support they need to survive the early years and grow into larger companies that can make a difference in their respective industries.
Another key development in the world of FinTech is the rise of crowdfunding as a new way to finance various projects. Whether it’s for a specific product or for an entire company’s equity, crowdfunding offers a unique mechanism for fundraising. It can be used to assess early demand and bring a large group of people along for the journey. Instead of relying upon one key provider to fund the whole thing, the risk is widely diversified. It allows for much more natural interaction between investors and their investees.
Small businesses can use this to their advantage to raise the funding they need while also building a community of stakeholders that care about what they’re doing. Not to mention the vested interest they have in their success.
The last trend we’ll look at here is automation. FinTech enables a wide range of opportunities for small businesses to automate a number of their routine, procedural financial tasks. These tasks would previously have taken up a lot of time and resources. By handing these off to intelligent systems, these businesses can deploy that energy to other higher-value tasks.
These FinTech systems can run 24/7 in the background, without any human intervention, and it opens up the doors for customers whenever they want to engage with your offering. It also liberates your staff from tedious work and allows them to spend more time on the things that really matter.
How These Trends Can Benefit Your Small Business
To summarize some of the reasons why you should be taking the FinTech revolution seriously, let’s look at some of the overarching patterns that can prove very valuable for any small business.
- Speed. Instead of waiting weeks for a bank to come back to you, you can access funding quickly and efficiently through FinTech solutions. Every minute you save here is crucial for keeping your business ticking along and it allows you to be much more agile as an organization. Time is money, as they say.
- Lower Costs. Because FinTech providers aren’t saddled with the infrastructure and legacy systems of banks, they can greatly reduce the cost of funding. As a result, you can maintain strong margins and operating leverage while still paying back your loans. This alone can be a game-changer for your company.
- Less Paperwork. This might sound trivial but every moment spent on administrative tasks is time that isn’t being spent on growing your business. FinTech providers who can eliminate a lot of the paperwork allow you to efficiently access finance without any roadblocks or bottlenecks.
- More Flexibility. FinTech offers financial services that suit your specific needs so that you’re only using what you need when you need it. You can craft your financial future as a result and tie your lending behaviour directly to the performance of your company. Flexibility gives you options and that’s invaluable in the early years when you’re still looking for traction and scale.
All of these pillars represent significant improvements on the current financing options available to small businesses. By leveraging each of these benefits, you can get on the front foot when it comes to your financial situation, making it that much easier to grow and prosper.
It’s time to fully embrace this new world of finance, for 2021 and beyond.
Our Role at Accrutus Capital
Here at Accrutus Capital, we’re passionate about helping small businesses access these opportunities and walking with them as they transform their organizations. These trends are not just a 2021 fad, they are here to stay. And we are doing all we can to create the sorts of products and services that can be the catalyst for that.
If you’re looking for alternative small business finance, working capital finance, unsecured business loans, or a range of other solutions we’re here to help. Get in contact today and let’s work together to bring your company into this exciting new world of FinTech.
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