Digitisation has definitely revolutionised business transactions in more ways than one. It allowed for maximum automation and minimum friction. We have seen the rise of FinTech, and we have felt the transformation of SME financing through digital technologies.
Digital transformation in SME financing
SMEs account for the majority of businesses in the world, and they are crucial for economic development on a global scale. However, access to finance had been a common struggle among many small and medium-sized businesses. Entered digital finance– the absolute game-changer in how business finance operates today.
Digital Finance refers to the general migration of the financial market and its functions to the digital domain. It demonstrates the impact of new technologies on the entire financial services sector. This digital transformation promoted technological innovation and supported entrepreneurial activities through automation, SME financing, and other financial services. Digital technologies successfully supported and optimised various financial solutions including payments, insurance, banking, crowdfunding, wealth management, lending, and many more.
Today, businesses can now enjoy broadened access to finance to drive business growth and innovation. Besides helping businesses, it has also helped financial institutions to operate at scale. Since digital finance is more robust and inclusive, not bound by time or space, financial services are able to optimise their business model and tap more small-scale customers in both rural and urban settings. Rational allocation of funds is better achieved and SMEs’ financial constraints are addressed with less friction and more possibilities.
Access to finance made easy
From optimising credit approval to automating manual transactions, financial services are now made more accessible and convenient. What used to be a long and cumbersome credit approval process now becomes a fast and easy transaction for both customers and financial institutions. Transactions can also be made more transparent, helping entities improve their regulatory policies.
Potential borrowers can not only save time and energy but also reduce costs for external finance. The application process is made simpler, faster, and more convenient. Some financial services can even provide funding within 24 hours. SMEs can now get in the game since access to finance is now easily within reach.
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