Fintech startups have changed the way small businesses borrow and manage money. Apart from simplifying and speeding the financial processes, digital financial services also eliminate human error. Here are some ways Fintech helps small businesses with financial and operational matters.
● Automated Transfers and Payments
In the past, it was difficult to manage payment and receipt processes. It used to take a long time for the financial processes to complete. Moreover, cross border money payments and transfers were complicated and expensive.
Fintech has enabled businesses to collect and carry out payments almost instantly through automated transfers and payments. The payments and transfers can be done in any currency and location. Even if you take a personal loan for business, the money will be transferred to you digitally.
● Easy Application and Documentation Process
Fintech is shortening the gap between borrowers and lenders. Platforms like crowdfunding portals and peer-to-peer (P2P) lending platforms directly connect the borrowers with potential lenders. This allows you to access funding at lower interest rates as compared to bank loans.
Earlier, applying for a personal loan for business was a long process. Most of it was attributed to lengthy paperwork. Fintech companies reduce the paperwork by providing templates for plans, and easy documentation that speeds up the application process.
● Digital Lending
Fintech has opened up a range of lending options that businesses can consider for borrowing money. There are a lot of digital lenders who offer small or big loans for working capital and cash-flow management.
Most of these digital lenders offer several benefits like reduced paperwork, simple online procedure that has a short application time, and easier eligibility criteria.
● Enhanced Security in Transactions
Cybersecurity can be a concern when it comes to money. However, financial technology has successfully taken care of that too. One of the popular technologies being used is blockchain. This technology protects customer data and reduces security risks.
Some Fintech companies use Artificial Intelligence to detect customer behaviours and patterns. AI is quick to detect any kind of malicious or fraudulent activities, and is quite accurate.
Another addition to the security list is biometrics. The security system verifies the customer’s identity before they make any kind of transaction. This helps in reducing the risks that come with unauthorised activity.
● Innovative Financial Tools
You can take advantage of innovative financial tools without investing in expensive infrastructure. Some examples of fintech payment and financial tools are:
- Data Analysis: You can use tools to gather big data and analyse it in any form you want. You can make important strategic and financial decisions using this information.
- Mobile Payments: It has become simpler to incorporate mobile payment systems on smartphones. You can easily accept payments and pay bills using your smartphones.
- Accounting Software: Fintech companies have made accounting accessible to small businesses through cloud computing. You can forget about the hassles that come with the paperwork.
There is a small learning curve when it comes to handling money-related tasks and processes as a startup. One wrong step can be expensive – literally. However, using Fintech solutions will make the job a little easier, faster and efficient.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at email@example.com.