Adaptability is a crucial quality when it comes to business success, and more so now than ever. The breakneck pace of innovation across industries has required businesses to keep up or risk failure. With an economy that has just barely escaped recession, it is more important than ever for businesses to recognise effective and equitable paths forward – of which fintech is a clear contender.
What is Fintech?
Before we continue, it is important to understand fintech as a concept and as an industry – and just how broad its definition can be. Functionally speaking, fintech is contraction of the term ‘financial technology’, and reflects technological products and solutions that look towards the handling of finances.
In the early days of fintech, this was almost exclusively early-digital processes for managing back-end transactions in a new age of banking. Today, though, fintech is a bleeding-edge industry with numerous subdivisions, and new technological advancements themselves changing the face of finance across sectors. With fintech being such a broad church, and with large-scale industry shifts dominating headlines, what are the tangible ways that fintech can help the small business?
Funding and Lending
Small businesses are finding it much easier to access and explore funding opportunities via new fintech frameworks. Funding portals gather retail venture capitalists and provide pooled start-up funding with reduced risk; this goes both ways too, with young businesses able to re-invest capital much quicker through fintech services.
Decentralised Money Transfer
The frontier of fintech is decentralisation. As technological advancements surrounding blockchain continue to find commercial footing, decentralised currency exchanges become more mainstream – introducing potentially frictionless routes to free trade and exchange of money, albeit with teething problems.
The major teething problems for small businesses adopting fintech products or processes that utilise decentralised exchange are legal in nature. It is necessary for a business to seek counsel from a fintech law firm in order to ensure compliance with international finance and tax laws, for example. The pay-off is access to wider and faster transacting, without losing significant amounts of capital to centralised risk.
E-Commerce and Conventional Transacting
Arguably, fintech’s biggest success story is the successful expansion of e-commerce, through the development of one-click payments and popular transaction management middlemen like PayPal and Klarna. These have paved the way for seamless digital transacting, and made it easier for new businesses to get a sure footing in digital markets.
Analytics and Insight
A subsidiary benefit to incorporating fintech solutions into your small business plan is the data you receive from it. Fintech services are well-placed to collect and interpret big data regarding customer behaviour, allowing your business to change course more intuitively in the face of new customer trends.
