Small Business

Five Reasons Why Small Business Owners Should Partner With Fintech Companies

By Zuri Harris

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Fintech companies are improving the financial industry and the broader economy. These companies are adding new value to businesses and customers in areas ranging from lending and banking to payments and invoice funding. 

This positive change is confirmed by the overall growth rate of the Fintech Market. The market is forecasted to keep growing at a 22% annual rate bringing it to a total valuation of $305 billion by 2025 (Market Data Forecast, 2020). Remember, the goal and competitive strategy of Fintech is to create, optimize, and advance technology that makes financial services more efficient, accessible, and personable.

What does this mean for a small business owner? 

Frankly, it means lower fees, better customer service, and tailored efficiency since most Fintechs are focused on serving the small business owner. 

If you’re not already working with a Fintech partner, you’re missing out. This article briefly outlines five (big!) benefits a small business owner gains from deciding to partner with a Fintech. 

And we’ll highlight a few great companies that continue to show value for their clients.

One: Customer Service is Their Business Model

Starting the list with customer service. Who doesn’t like to be heard, understood, and valued?

One thing that all Fintech developers have in common is that they all saw a customer need, which was not being met by traditional financial service providers. 

Due to how firmly rooted legacy operating policies are in traditional financial service providers business models, Fintechs have the advantage of being a more modern solution and, therefore, the ability to avoid restrictive policies that can take years (even decades) to transform/improve successfully.

They are meeting these needs by using, you guessed it… technology which makes their services more accessible, customized, and faster. Monzo, a UK based digital bank, is a leading example of customer service as a business model in Fintech. 

Monzo has made it its business to give their clients the best experience possible. They have put this idea into action by: 

  • Having a completely digital onboarding process, 
  • Creating Monzo Labs a forum where existing customers can try new products and give immediate feedback (helping to identify and address areas for improvement quickly), 
  • Allowing clients to vote on which new features they would like implemented first, 
  • Providing real-time alerts to service interruptions via Twitter, 
  • Providing detailed FAQ pages, and,
  • Ensuring fast real agent response times. 

Two: Disintermediation - Help you Fulfil Your Customers Needs Faster

Disintermediation is the process of closing the gap between customer needs and the fulfillment of these needs. This process greatly benefits the small business owner because a smaller gap between a customer and their fulfilled needs leads to:

  • More transparency – building trust between you and your customers
  • Decreased cost – providing higher margins for you and better rates for your customers
  • Better customer experience – increasing repeat revenue 

Affirm, for example, is doing a great job of accomplishing this for eCommerce and retail businesses. Their offering allows their clients’ customers to purchase a product and then pay via custom made instalment plans. This is an excellent solution for business owners who want to give their customers the ability to have their product when they need it regardless of their current budget. Also, this solution allows businesses with higher-priced products to reach a greater audience helping to increase sales. 

Three: Innovative - Always Looking for New and Better Ways to Implement Solutions

Unlike their traditional counterparts, Fintechs are not tied to the old way of doing things; therefore, they can pivot and innovate on a faster basis – in other words, they keep up with the ever-changing business landscape, which in turn helps you to as well. 

Invoice factoring has been around since ancient Roman times, and the method of doing it has not changed much since. FundThrough is a Fintech company that has taken an innovative stance on factoring. 

They do this by integrating with account software platforms such as OpenInvoice, Cortex, and Quickbooks to allow quick invoice submission, providing flat rates, no contracts, fast deposits, and a fully digital experience. FundThrough has used technology and innovation to “To help companies (like yours) thrive and give them control over when they get paid.”

If you know your business could benefit from lower fees, increased efficiency, personalized customer service, maximized disintermediation, or innovation it’s time to learn more about  Fintech. You can do so, right here. 

Four: Data Partner - Help You Make Sense Of It All

With Fintech solutions came improved data management and interpretation tools. Fintech companies use AI to make sense of data that is too vast for the human brain to analyze without help. This enables them to provide small business owners with insights that aid them in optimizing their business. 

Your customers are buying your product but do you know what their payments are telling you about your business model? Ayden is more than your average payment solution; it helps you gain more insights into your customers’ behaviour. 

You will get an in-depth view of your payment flow, giving you the ability to: quickly identify gaps and fix them, understand the reason for card declines and acceptance, letting you know if there are processes you need to fix in your payment flow and real-time reporting helps you see how well you are meeting your transaction KPIs. 

Studies have shown that up to 40% of sales are lost due to the inability to identify payment funnel/ friction problems during the checkout process (Misasi, 2018). Solutions such as Ayden’s make sure you are not missing out on sales due to unknown payment flow complications.

Five: They Are Cost-Effective - Save You Money in The Long & Short Term

Most Fintech — especially those in the foreign exchange, payments, and banking sectors — offer much lower prices than their traditional counterparts (i.e., Brick and mortar banks, forex bureaus, and more). They owe this to their ability to efficiently leverage technology to decrease their customer acquisition and operating costs.

Gone are the days when banks could hide fees in exchange rates, and small business owners had to accept them. Companies like Currency Wave have removed the veil by providing their customers with a live exchange, wholesale interbank, and transaction rates. 

This data provides full fee transparency and helps small business owners analyze exactly how much they would be saving using this Fintech option. Businesses who need to pay overseas suppliers, repatriate foreign currency receipts, pay import/export fees, etc. can do so in a more cost-effective way allowing for immediate savings and better margins in the long run.

The Bottom Line

FinTech Companies have a number of benefits they can offer their partners from disintermediation to innovation. Partnering with them presents a win-win scenario for both the small business owner and their customers.

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