With the advancement in recent years, the financial sector has experienced many digital disruptors that have made it easier for smaller businesses to compete on a global scale.
In the most general sense, the world is getting more accessible. Whereas in the past doing business with someone on the other side of the world posed a mountain of practical and logistical problems, now there are services aimed at reducing or removing these hurdles altogether.
Small but growing, showing your scalability
One thing has plagued small businesses for a while. Small business is often short staffed with employees often wearing several hats. These lead to a lean and agile business but often leaves no one person solely in charge of updating information particularly in relation to financial records.
This can lead to several problems, not the least of which is not having a clear way to show growth and scalability. Without the means to show the value business often struggle to secure funding or even credit. However now with many systems that can digitize and organize the numbers into coherent records, it is much easier to show the value and secure funding.
Tapping into the global marketplace
It has never been easier than it is now to do business all over the world. Before the emergence of Fintech, there were only a few reliable ways to move money around the world. However, in the current digital landscape, this couldn’t be further from the truth.
There are now several ways to easily do business with the other side of the world without ever leaving your office. Services like Paypal and Stripe, and even cryptocurrencies like bitcoin have made doing business across borders not only easier but in many instances almost immediate.
There are less hoops to jump through to get a loan
There was a time when banks had all the power. If you wanted a loan you went to the bank, if you jumped through enough hoops you might get a loan, if not, your options were limited. Fintech has disrupted this area as well. Peer to peer lending has cut out the banks entirely, and financial platforms are utilizing fintech to help them sort through short term loans and acquire the additional information they require faster than ever before. This allows businesses to spend less time on the application process and all the back and forth that goes with it.
Furthermore with the emergence of crowdfunding, a business can turn to their customers to meet some of their funding problems.
A movement away from collateral based lending
If there is one thing that almost all small businesses deal with its cash flow. There are countless tales of woe of companies who went under while profitable due to cash flow. Where in the past securing funding was based on collateral/owned assets, with the rise of invoicing platforms like Myob or Xero it can be easy to show a business with little assets but high monthly revenue. Now, these companies can simply show their accounts receivable and not be judged solely on their collateral.
The fall of international fees
In the not so distant past if you wanted to move money around the world there were fees involved. The bank doing the transfer might take a fee, the bank receiving the transfer might take a fee, the currency had to be converted, at every step along the way there was something or someone taking a piece of your pie.
As much id like to say this isn’t the case anymore I cant, there is still some of this going on today depending on the route you choose to send your money. However, if you take your time to weigh out your options things are a lot better than they were, and in some cases like bitcoin, no fee at all. With the proliferation of credit cards, peer to peer transfers, cryptocurrency, and platforms like transferwise, there are many options to suit your needs.
The future of Fintech
While no one knows for sure what the future of Fintech will look, it seems logical to believe that this trend of making it easier to move money will only continue. This can be seen very clearly in the rise of the cryptocurrencies. More and more people are looking for decentralized ways to move their money and moving away from the antiquated fees and slow movement of banks and traditional financial institutions. While in its current state many cryptocurrencies seem shaky at best, many believe these instabilities will be fortified in the near future, at which point it will become a mainstream vehicle for wealth distribution.
Fintech is here and constantly evolving. It is hard to say exactly what the next major disruptor will be, but it is hard to deny that the industry is ripe for disruption. Every day it is getting easier and faster to do business in a global marketplace, and we can only assume this will continue. It is never easy for a small business to take on some of the global goliaths, but it is possible, and the big companies are scared. Keep your eyes on the horizon for new products and services, because the more prepared you are and the faster you get a leg up on your competition, can often make all the difference.