Cryptocurrency, online banking, peer-to-peer lending: Each of these terms emerged in the last decade under the umbrella of fintech, the fast-emerging industry that combines finance and technology. The day-to-day impact of fintech can be seen in all aspects of business, such as contactless payments, cheaper and quicker international transfers, and more efficient and easy-to-use accounting software. Fintech has also seen the banking sector’s democratization, with startups including Monzo and Starling Bank offering more flexible, mobile-friendly options. The established players like Citi and Bank of America are racing to catch up.
As ever with finance and digitization, data is at the heart of fintech’s rise. The ability to track, monitor, and manage data in real-time in a few clicks has enabled companies to process and automate financial transactions quickly. With 69% of SME owners stating that cash flow is the main issue keeping them awake at night, the importance of quick and accurate transactions cannot be overstated.
For SMEs, API management platforms can play a pivotal role in maximizing the impact of fintech products on business operations. Solutions like Universal Adapter can support the digitization of financial processes in small-to-medium-sized companies.
The fintech industry is experiencing a 25% annual growth rate and is expected to be valued at $310 billion globally by the end of 2022. This matters for SMEs because it demonstrates the transformation of the financial landscape and the opportunities it brings.
The Global Financial Crisis triggered the first explosion of companies looking beyond reluctant banks for financing options. The following decade then saw several tech firms offer a new way of doing business. PayPal, for example, has moved beyond its money transfer roots to become a leading lender to small businesses.
As the digital era continues to evolve, the integration of fintech into SMEs will only grow. The Covid-19 pandemic has forced previously reluctant companies to embrace technology that allows people to work flexibly and remotely. The accelerated innovation will push fintech further into the mainstream as businesses seek to streamline financial processes.
Academics at the University of Pennsylvania’s world-leading Wharton Business School identified six ways fintech can revolutionize SMEs:
A common denominator in the six ways fintech can support SMEs is flexibility. Instead of relying on lengthy, stringent processes to achieve key goals, businesses can take advantage of digital technology to speed up time to revenue and growth.
Digitizing the critical financial processes can help streamline business operations in terms of cost efficiency and steady cash flow. Using an advanced API management platform, companies can easily integrate fintech products with other platforms such as Netsuite and Salesforce.
In doing so, SMEs will be able to track the complete customer journey from the first interaction right through to payment and delivery. The advantages are two-fold:
APIs facilitate this ability by allowing multiple programs to pass information to each other, regardless of the format they use. An API management solution enables SMEs to use existing APIs and quickly create new, customized ones.
With cloud technology and the ever-increasing importance of data management, SMEs worldwide embrace the digital revolution. Time and time again, APIs have been proven to be the hidden engine behind the digitization of the economy. The corresponding rise of fintech has also generated opportunities to streamline financial operations.
By combining APIs and the latest fintech products, SMEs can operate efficiently in the global economy. The digital era allows the smallest companies to sell products and services across borders effortlessly, increasing the potential for growth and profits. Fully integrated, digitized businesses powered by APIs and fintech will be best placed to take advantage.