The growth of FinTech has transformed the way small companies do their business. They are eliminating a lot of traditional processes of the chain and becoming more transparent to their customers.
For crowdsourcing to mobile payments, entrepreneurs were not getting many choices like they are getting at present. It was never so budget-friendly to set up your business and also to develop it.
FinTech Apps are gaining more and more attention with each passing day. Business owners are incorporating finance and banking entities to establish FinTech startups.
This trend is pretty suitable for businesses, especially small-sized ones. It helps them to leverage finance automation, data analysis, and flexible financing options. In other words, it provides them more freedom regarding their finances. Similarly, if the business wants to automate the supply chain tasks, it can be easily done with the help of tailspend management.
The US Small Business Fintech Report
In this post, we will go through some of the benefits FinTech provides to small-sized businesses. So let’s get going.
How can FinTech be Beneficial for Small Businesses?
FinTech has opened a new world of potential opportunities for micro-businesses. They can now deliver enhanced services in a budget-friendly manner.
#1. Financial and Accounting Automation
Small-sized businesses always seem running tight on a budget in most of their processes. Almost half of the micro-business can not afford to hire a bookkeeper or accountant. Financial and accounting operations are critical aspects of any business, especially when you have a small business and are expanding. FinTech apps are booming to bridge relevant gaps.
FinTech solutions help small businesses to save accounting expenses by monitoring personal and business taxes, invoice managements, overall costs, payroll & contractor payments, deduction, cash flow forecasting, and much more.
Sound knowledge of your finances enables you to make improved decisions about where and when to invest your capital. Apps such as Quickbooks, Xero, and Zipbooks are aiding brands in their daily monitoring of costs, taxes, deductions, etc. It also has an option of self-learning if leaders want to acknowledge more about these topics.
#2. Easing Money Transfer
Small businesses that target the international market have to involve with international money transfer, overseas payment acceptance, and foreign exchange. It decreases the expenses of bank fees.
FinTech corporations managing money transfers overseas are leveraging encryption to secure users’ sensitive data. They also adhere to legal rules and regulations to ensure customers’ financial safety.
Digital wallets from the companies such as Billion, TransferGo, cost very little. They also offer different payment methods to receive money. It helps to boost sales and grow business.
#3. More Funding Alternatives
Small businesses need enough external funds to start and expand their business. According to research, micro-businesses take an average of 25 hours with each loan application. If they get rejected, they have few options remaining with the localized banks. FinTech can accelerate this process drastically.
Owners can use any funding app to provide all the essential details to fundraisers. It takes max half an hour to analyze it and to make the decision. It saves a lot of time for the companies and provides various options for fundraising according to their preferences.
Startups can easily apply through their smartphones and app collects interested investors to seal the deal. There are many FinTech equity/crowdfunding alternatives for small businesses. Examples are Crowdfunder, NetCapital, Kickstarter, Indiegogo, Fundrise, etc.
#4. Online Payment Processing
Today’s customers are more likely to pay with debit and credit cards. Other digital payment options such as mobile wallets are also emerging. It offers customers many alternatives rather than paying in cash.
If you want to make more transactions, you need to provide all the possible online payment options to your users. But for some businesses, it is not helpful to install bulky point-of-sale machines. Businesses such as clothing stores, restaurant owners, etc., need simple yet quick payment processing from smartphones.
Mobile payment solutions are easy to integrate. It is just like credit card readers that need to plug into your smartphone. Some of the popular online payment platforms are Square, PayPal, and PayAnywhere.
#5. Transforming Insurance
FinTech is revolutionizing all the business operations of the insurance industry. FinTech innovations have the potential to provide many benefits to the insurance business.
- Increase Efficiency
- Mitigate Cost
- Enhanced risk analysis
- Excellent customer experience
- Better financial inclusion
The insurance sector is now following peer-to-peer, usage-based, and on-demand business models. It simplifies the policy purchase process by enabling business owners to apply online. The number of online insurers is increasing each day.
FinTech offers use-based liability insurance for contractors. Policies can also be customized according to the length of the job and paid through mobile apps.
#6. Security on Cyber Attack
FinTech is also taking care of the security system by using AI to detect customer patterns and behaviors. Artificial Intelligence detects malicious activities accurately and rapidly.
Biometric security systems validate customer identity before they make any transactions. It decreases the risks of illegal operations.
Blockchain mitigates risks of digital security and safeguards customers’ confidential details.
Face recognition, fingerprint scanning, biometric, etc., deliver high value to the company as customers feel safe from cyber attacks. It prevents circumstances of danger for the company and protects its data.
#7. More Retirement Options
FinTech companies are helping small businesses with flat-fee retirement plans by decreasing the cost. Small business owners can also design their plans, offer record-keeping, compliance, advisory, and reliable services.
Robo-advisors are the most popular FinTech innovations which relate to automated online services. It leverages computer algorithms to offer financial advice and manage customers’ investment portfolios. The computerized approach lets people access the data they require to make intelligent retirement plans at a low cost. Robo-advisors assist seniors in handling the decumulation of their assets in retirement.
The industry is evolving to provide automated solutions to small businesses to manage all the employee benefits.
Entrepreneurs appreciate how FinTech is opening new doors for businesses. They are happy with the FinTech apps as it is actually streamlining many financial activities. From managing the cash flow to selecting a preferred retirement plan, the FinTech app covered everything.
In recent years, the rise of the FinTech industry has mitigated different hurdles for small businesses starting from tedious bank processes to expensive accounting services. It makes financial workflow more efficient, saves money, and delivers an enhanced customer experience.