“All big things have small beginnings.”
And the classic example to prove this quote right is the United States’ SMEs’ (small and medium-sized enterprises) industry.
Small and medium-sized businesses are the backbone of any economy.
In the US, the Small and Medium Enterprises (SMEs) sector plays a major contributor to the country’s socio-economic development. It creates two-thirds of new employment opportunities and powers innovation and competitiveness in the country.
Did you know, businesses with less than 500 employees drive the US economy by creating employment for over half of the country’s private sector?
According to a US Small Business Administration Office of Advocacy report,” small businesses account for 44% of the US economy.
Considering the kind of contribution small business makes to the US economy, an entire week is dedicated to celebrating “National Small Business Week,” which recognizes the critical contributors of the country’s entrepreneurs and small business owners.
Often observed during the first week of May, in 2021, the National Small Business Week falls between May 2 and May 8 this year.
Why are small businesses critical to the economy?
In America, small businesses are major contributors to the US economy. The country has over 27 million small businesses that generate close to 50% of the country’s GDP (Gross Domestic Product).
Not only this but, small businesses,
- Create employment
- Drives innovation
- Offers opportunities to a large number of people, including women and minorities, to help them achieve financial independence and success
The charisma of small business
You will be surprised to know how magnificently businesses that started in a garage and those that failed multiple times now are leading the world.
Some small business founders such as Thomas Edison and Henry Ford have earned a place in history.
Others include multi-million dollar enterprises such as Microsoft (Bill Gates), Apple (Steve Jobs), eBay (Pierre Omidyar), Walmart (Sam Walton), Dell, Inc. (Michael Dell), and who can forget Google, founded by Larry Page and Sergey Brin.
Not that we understand the gravity of the existence of small businesses in an economy. It is time to know how fintech start-ups play a vital role in bringing innovation and technology to SMEs for better trade and growth.
Fintech. Innovation. SMEs
Technically, fintech is omnipresent, and several solutions offered by the genre are already an intrinsic part of most of our lives. Combating laggards like the functioning of lending and borrowing have been eliminated by innovative technology. Not just this, but 2021 amidst the pandemic is all set to bring about a transformational change in the B2B payments methodologies, with the potential to transform the payments ecosystem.
- Sophisticated financial tools and services
Tech is disruptive. This is the major reason why small and medium-sized businesses benefit from innovative services without investing in expensive infrastructure.
Here are some interesting solutions fintech offers small businesses.
- Mobile payments
As time is flying, innovation makes it more evident that cash payments will be a thing of the past and completely obsolete in no time. Today, a large chunk of people go for cards or smartphone apps to make payments.
Recently, especially during the social distancing phenomenon, mobile payments have leaped and gained popularity as fintech technology makes it extremely easy for merchants and consumers to get started and use mobile payment systems via their smartphones.
- Data analysis
Fintech companies are going out of the box and offering small businesses the best tools necessary to gather big data and analyze data in any form of their choice for enhanced customer service and customer experience. Data analysis tools such as Tableau Public, Python, and SAS are a few tools that help small businesses make strategic decisions.
- Accounting software
Fintech is revolutionizing. It offers streamlined payment options and makes accounting easy, reliable, and affordable with the power of cloud computing. This technology has bid goodbye to the tedious and manual paperwork with tools that are easy to be used.
- Reliable security system
The combination of finance and technology demands cybersecurity. But the good news is, fintech has already taken care of this phenomenon.
In a more elaborate sense, fintech leverages the power of AI (Artificial Intelligence) to detect customer patterns and behavior. AI is extremely quick and efficient in detecting signs of malicious activities.
The addition of blockchain to fintech reduces digital security risks and protects customer data.
Long story short, with fintech, small businesses just need to plug and play. Rest every aspect is taken care of.
Over the past few years, the adoption of fintech has been unparallel. Consumers and SMEs have shown positive interest in the adoption of fintech and data sharing.
Here are some stats by Global FinTech Adoption Index 2019,
- Global SME adoption is 25%
- 56% of SMEs make use of banking and payments fintech service
- 89% of SME adopters are ready to share their data with fintech companies
These stats simply showcase how fintech is becoming an integral part of the SME sector. Therefore, for SMEs, it is essential to embrace innovation and technology fintech offers.