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  • Writer's pictureMarc Primo

Why More Businesses are Seeking Help from Fintech Startups

This is an article “Why More Businesses are Seeking Help from Fintech Startups” by Marc Primo

Coming out and barely breathing from a disastrous year of COVID-19, small businesses around the world that survived the stress of many closures, furloughing of employees, and bankruptcy are looking for new ways to approach the better normal. With the discovery of eCommerce’s potential, the country’s micro, small, and medium enterprises are shopping for new partners who can help them with their financial management. Thanks to some financial technology (fintech) startups, even struggling companies are meeting their needs when it comes to small business banking.

Aside from worrying about payrolls, small businesses still have to deal with multiple accounts for such overhead expenses as supplies, rent, or third-party services. Needless to say, one who deals with cost accounting (even for an agency of a few people), can easily get lost with all the numbers if they are handled manually.

Thanks to the current federal aid program, businesses are starting to see the light at the end of the tunnel and channeling their money to essential lifesavers. However, without the right financial tracking and automated banking tools in place, company savings can be a little precarious.

If you haven’t tapped a fintech agency that could help your small business yet, here are a few things to know before you shift to digital money management:

You can get faster loan approvals

Due to the increasing need for financial support for smaller businesses, some fintech startups have banded together to streamline the application and approval of loans for struggling companies. Before the pandemic, it would take around 25 hours to process single applications in traditional banks. However, with the help of fintech companies worldwide, this timeframe has been cut down to as little as 30 minutes, with all data securely encrypted via cloud computing systems.

With many lockdowns and stay-at-home orders implemented in 2020 and early this year, fintech startups have also found solutions to remote bank processes through digital systems that enable automated loans, real-time customer services, and instant alternative credit score checks. Algorithms and machine learning tools review and evaluate a client’s risks and financial behavior to fast-track the process to just a few hours in an impressively transparent manner.

More secure than traditional banking

In past years, there has been a long-standing argument on whether or not online banking is safe from cyber, identity, or money thefts. Thanks to blockchain technology and how fintech companies are utilizing strict encryption protocols in their systems, the digital exchange of money is more secure now more than ever.

Advanced solutions ensure that there will be no data leaks for small companies that used to be the preferred victims among hackers so that all financial information will remain confidential and protected. In one 2019 study conducted by consulting and processing company Accenture, cyber-attacks are said to cost an average of more than $240,000 per company. With the demand for necessary solutions to address the challenges of a global health crisis in 2020, fintech startups have collectively beefed up security protocols.

However, money is not the only thing that a company should secure online. By far, the biggest data breach in cyber history was when consumer credit reporting agency Equifax’s systems were hacked for nearly 150 personal information accounts including names, social security numbers, and other pertinent details.

Fortunately, smaller businesses have found rescue by working with fintech startups in instituting more sophisticated data protection such as biometric payments on mobile smartphones, or even voice and facial authentication features. These features significantly reduce the likelihood of payment frictions and data theft, while also making it easier to monitor and track the money that goes in and out of multiple accounts.

Reinforced transparency

Fintech startups have also helped MSMEs to manage payment collections and accounts payable tasks more conveniently. With automated systems and in-app schedulers, there are less chances to miss out on regular rental and utility payments that could incur interest charges when they are not settled in time.

From this type of company money management to the automated generation of digital invoices, disbursement of employee salaries, and issuance of payslips, fintech startups are stepping up online banking processes that help companies become more productive and make better financial decisions.

Of course, there’s also the sudden prevalence of eCommerce platforms wherein customers can easily place orders online, check out items from their digital shopping carts, and complete the transaction by paying via their e-wallets, credit, or debit cards. Today, even smaller companies can enjoy these convenient transaction processes, thanks to how fintech companies are enabling the swift transfers of money via blockchain. Now, consumers can order and pay for products that come from abroad without any hassle.

Better small business banking

As the economy slowly returns to normal and more people will resume buying products in brick and mortar stores, there are no signs that the online banking solutions that fintech startups have established during the pandemic will go away. In fact, more providers continue to innovate the way people manage their money in the digital space as the realization of integrated small business banking becomes clearer.

Fintech vendors such as Square secured a bank charter approval so it can directly process loans for small businesses faster while San Francisco-based Plaid introduced payroll solutions for employee loans via its app which they can use in minutes. Innovative solutions like this not only help companies build trust and transparency with their employees but also allow employees to have control over their money via in-app and easy-to-use e-wallets.

Another benefit companies can get from fintech startups is how dedicated dashboards can let financial managers oversee everything within one system. Tracking your cash flow from payables or receivables, becomes easier and accessible anytime, anywhere on various devices with mobile apps and software with built-in authorization systems so that payments and disbursements won’t be delayed.

Supporting MSMEs and ensuring that they remain liquid throughout difficult times are what make these fintech startups work. Not only do they keep smaller companies afloat during the pandemic, but they also develop practices that increase company productivity by automating the most tedious tasks in financial management. Company money is more secure, processes are made easier, and help is more reliable which all truly serve as gleaming silver linings from that dark ominous cloud brought about by COVID-19 that dampened global businesses last year.


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