(^18) COVER STORY
harvest user data from sources such as eBay,
Amazon, PayPal and UPS in order to build
similarly predictive models.
New sources of equity and debt
funding for SMEs are also opening up via
the crowdfunding and peer-to-peer (P2P)
movement. Equity crowdfunding platforms
wherein investors buy an actual stake in
the recipient’s business are only one of the
crowdfunding options, coexisting with a
number of pre-selling, donation-, or rewards-
based platforms. The leading US equity
platform, Kickstarter, raised $480 million in
2013, while UK-based Crowdcube and Seedrs
raised £12.2 million and £1.4 million worth of
investment respectively.
A common feature of such platforms
is the ability to turn investor pitches
into fundraising campaigns through
multimedia content and social media
integration. Platforms rely on this
‘campaign element’ and are built to enable
two-way investor communications and
‘crowd-based due diligence’.
To complement the financing sector,
fintech solutions are also targeting SMEs with value-added services. These enable SMEs to
access new levels of financial services that were historically only available to corporate clients.
WHAT’S NEXT?
It’s pretty clear that future financing will be driven by technology. Emerging technologies
and the pace of innovation are driving changes throughout the banking industry at an
unprecedented rate. Across Asia, consumers are not only increasingly adopting digital—most
are demanding it. With more consumers adopting the digital products and services from
leading big tech companies such as Google and Amazon, they have come to expect the same
seamless experience with banking as well.
And so have SMEs. Busy entrepreneurs no longer have the time to step into a bank branch.
Instead, they expect to bank at their desk or as they go about their day.
On the other hand, banks are leveraging technology and data to streamline their back-end
services. Information about an SME’s financial position can be easily ascertained from various
digital sources: the cash flow in their business current account, merchant payments, online activity
etc. The challenge is to bring the disparate data sources and analyse it as a composite whole.
Consequently, new players in the market are coming to disrupt the banking/debt finance
model. SMEs have also become increasingly frustrated with what they perceive to be poor
customer service through the continued deployment of legacy processes, coupled with restrictive
finance requirements. Therefore, new fintech startups have come to bridge that gap.
Whether the incumbents will be able to manage the disruption and shake off competition,
one thing is certain—the SME financing sector will never be the same. It will become more
granular, more personalised, and more data-driven. The financial crisis of 2007-2008 showed that
when big banks tighten their belt, SMEs have a lot to lose. Alternative sources of finance will lead
to a more diverse ecosystem—and just like a biological ecosystem, diversity is strength.
SME FINTECH RANGE OF SOLUTIONS
VALUE-
ADDED
CORE
NEEDS
FUNDAMENTAL
NEEDS
(^) OMNICHANNEL BANKING
(^) MARKET INSIGHTS
(^) AGGREGATOR SERVICES
CREDIT SOLUTIONS
CROSS-BORDER FX PAYMENTS
BUSINESS TOOLS E.G. ACCOUNTING, HR, KYC TOOLS
DAY-TO-DAY LIQUIDITY
RISK MANAGEMENT
GROWTH FINANCING
romina
(Romina)
#1