Futurist Gaston Berger says the purpose of looking at the future is to disrupt the present. For small business fintech is that future. But what comes after that?
Welcome to 2017. The year in which more and more investors focus on the financial technology (Fintech) sector. The reason is simple: in 2016 the investment in Fintech firms rose by 10% globally to the tune of R345-billion.
As it stands China is at the forefront, notching up around R150 billion in 55 deals (which accounted for 90% of investments in the Asia-Pacific, according to TheNextWeb). The United States has come in at second with R90 billion, while Europe trails in third place.
It all comes down to disruption, especially when it comes to traditional financial institutions like the banks, or credit companies and insurance. With the emergence of Fintech, the future is now; here’s why, Fintech is the way to go, especially for small businesses. Here’s why:
Be better… for less
There was a time when Fintech was seen as cutting edge and innovative, but with the democratisation of tech and the glut of companies in the space, the tools have become more accessible to a wider range of entrepreneurs. The question now isn’t whether to buy into Fintech, but rather what it means when you do.
Read more on why more businesses are flocking to Fintech: http://bankinnovation.net/2016/12/5-reasons-small-business-owners-need-to-follow-fintech-in-2017-sponsored/
Let’s say you run a small operation; a coffee shop. You have always made great coffee, with customers coming in, paying for it and leaving. Nowadays, most people don’t carry cash – not even enough to tip a parking guard or buy that cup of coffee. Paying for coffee hasn’t changed, but the way a customer pays, has changed. What Fintech does is make sure you can accept all kinds of payment, quickly and securely, while taking out the hassle of processing them yourself. This is done at an extremely low cost and almost no admin, while making sure you don’t lose out on the card carrying consumer.
At its core the Fintech model is based on the idea of making things cheaper, better and easier. As it becomes even more common and available, simple supply-and-demand principles mean that Fintech products become more affordable.
Be more efficient
The Fintech industry is one of constant change and constant improvement, allowing businesses to adjust quickly to process. When we look at business loans, this trend is even clearer. Getting a loan from a traditional bank is often riddled with admin, from forecasts to long queues – what Fintech companies are doing is simplifying the application process, so that its as easy as a click or a call. When it comes to your business data (such as, how many swipes you made monthly) it is already available and on-hand.
All in all, Fintech has allowed businesses to streamline the way they do business; become more competitive with less hassle than before. This isn’t technology for ‘technology’s sake’, but rather it allows businesses to cut through the clutter of admin, cost and inefficiency to do what really matters – run a thriving business.
It gives you options
One of the best features of the Fintech space is it has increased the options open to small businesses. This means you are better able to compete with bigger and better funded companies.
For example we hear a lot about Big Data these days and what those insights can mean for running a great business. What is discussed a lot less is meaningful data. As a small business, data about customer perceptions, interests and industry trends are important to growing, sustaining clients and remaining competitive.
Fintech tools give small businesses access to convert data into meaningful data at lower cost and effort than before. The key to Fintech best practice is to make sure you know what products are available and which are most applicable to your business needs, both now and in the future.
But…what is that future?
Say hi to AI
Artificial intelligence and finance? BFFs. AI will soon be accessible to a larger portion of smaller businesses by supplying business intelligence and predictive analytics. Merchant services (i.e. payments) will be relying on AI to look deeper and seek out customer patterns and put a stop to substandard transactions.
But, as is the case with AI… what becomes of the analysts, traders, advisors and bankers? Will artificial intelligence threaten their job security? Developers don’t like to predict, but they do believe the introduction of AI will see the end of human error, which for many businesses is something akin to a golden-maned unicorn. It’s these examples that make AI one of the major to Fintech's future. That, and small business being open to taking it on in the bid to remain nimble and innovative.