Fintech and SMEs – what has changed?

Fintech and SMEs – what has changed?

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Technology is growing at an exponential rate, and no industry can escape the impact of it. As we have explored in other posts, finance is not an exception. After the boom observed over the past few years, fintech is now becoming increasingly mature, and the impact that is having on small and medium-sized enterprises is more and more evident.

In this post we are exploring solutions fintech is offering to solve some of the typical pain points that SMEs are suffering:

Access to funding

SMEs face serious challenges to access new capital, and this limits the growth and in some cases is critical for survival. SMEs face high transaction costs arising from raising capital through traditional channels and investors meet major obstacles when investing in startups created by complicated regulatory frameworks. With equity crowdfunding platforms such as Crowdcube and Circle Up, investors can easily browse through interesting investment opportunities, while SMEs can raise funding at a reduced cost reaching international audiences. If we consider the tremendous growth in the past twelve months of the initial coin offerings (ICOs), allowing companies to issue and sell equity tokens to raise capital, we see bright perspectives for the future to broaden access to funding even more.

Invoice financing

SMEs used to sold accounts receivable, which is represented by the outstanding invoices to its clients, through factoring at a discounted rate, to have a benefit on their cash position. Fintech has pushed the development of a great number of online payment companies, offering flexible solutions that can be easily integrated with other fintech services, like for example accounting software, which makes the whole process quicker and cheaper.

Access to business lending

P2P and P2B lending platforms are the fintech solution fostering the access to lending, the industry that represents a large part of the alternative finance market. Online lenders can provide a solutions where banks and traditional financial intermediaries are not able or not willing to. However, it’s not only about being able to reach a broader range of companies, as online lending platforms reaching out to SMEs also solve two other significant issues – minimizing the time of application process as well as ensuring the transparency of the operation.


Fintech solutions are designed to save time and expenses, as well as make accounting more effective. Starting to manage all bills, invoices and financial data with integrated digital solutions allow to substantially increase the efficiency and decrease time and efforts spent on bookkeeping. Fintech companies also offer convenient tools to, for example, automate debtor tracking. Also, in this case, the true advantage comes from the possibility to integrate multiple fintech providers through their open APIs.

Debt collection

Debt collection is one of the most annoying and painful processes for both debtors and debt collectors when in most cases this last category still uses phone calls and paper mailings when attempting to recover their or their client’s money. It’s just in the last few years that we started to see a couple of fintech startups that are trying to innovate this very outdated process bringing it online and by creating a tailored experience with each debtor using Machine Learning (ML), Artificial Intelligence and advanced behavioral and data analytics. The current developments look encouraging, but this is one of the points where there’s more room for improvements, to make this process at least a little less painful and at the same time to increase the success rate in recovering SMEs debts.


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