How FinTech can help SMEs

Financial technology (FinTech) is the current hot topic of the season and there’s so much news on the technology that banks and companies can incorporate to facilitate finance-related processes, thus increasing productivity. FinTech are new financial business models and disruptive innovation. They are the hybridisation of technology with traditional financial products and services. It can be anything from a mobile banking application to a P2P lending platform. As long as the technology is facilitating a financial services transaction, it is considered FinTech. (Source: Border Crossing UX)

However, what’s in it for SMEs then? Should small businesses also hop on the bandwagon? Today we look at a few reasons why FinTech can help SMEs.

1. Alternative financing

Having cash flow constraints causes SMEs to delay their growth strategies. To grow, SMEs need working capital and they often choose to apply for loans to finance their business development. However, financing options from banks can have regulations, criteria, and processing time that may not be able to meet the needs of SMEs. Furthermore, elaborate requirements for collateral can stop a promising SMEs from getting the financing they need.

To solve this issue, FinTech models such as peer-to-peer (P2P) lending and crowdfunding offers a solution by building an online financing platform for SMEs. Since the whole process is online, the application process tends will be quicker and more convenient for applicants. There are also certain P2P platforms that use apps and any business owner can easily apply for financing through the app. (Source: DollarsAndSense)

Previously traditional financial institutions ignored some market segments due to high service costs. However, digital banking has allowed financial transactions to be accessible anywhere in the world, at any time. Furthermore, it is more cost-effective to serve customers and increases the reach for market segments that was previously unprofitable or unreachable via traditional methods.

2. Accounting purposes

Accounting is crucial for SMEs to manage their financial condition. With proper management of financial statements, SMEs will be able to identify problems that they are currently facing and come up with solutions to increase profits. However, some small businesses may lack the capital to hire an in-house accountant and might end up outsourcing it.

Hence, some FinTech platforms provide accounting technology to help manage SME financial statements. Since many SMEs in Singapore face delays in payments, it causes a compounding effect on the company’s operations, its ability to reinvest in the business and ensure long-term survival. Using FinTech platform allows SMEs to have an easier invoice and payment process. In addition, many of these accounting services are based on cloud servers so business owners can access their data anywhere, anytime.

3. E-payments

As Singapore move towards a “cashless” society, there are more FinTech digital payment solutions such as online and mobile payment options, along with multinational and multi-currency options that will help businesses gain a simpler way to manage financial transactions. The electronic and digital payments solutions will especially help small businesses sell their products and services to a wider audience than if they were only dependent on cash. (Source: DollarsAndSense)


Singapore is gradually growing into a global FinTech hub with its thriving environment and mature financial industry. For example, P2P lending, has been growing exponentially in a well-regulated space locally.

Compared to 5 years ago, SMEs in Singapore now have access to innovative financing solutions offered by FinTech players. Funding Societies alone has supported SMEs with almost S$200 million in crowdfunded loans across Singapore, Indonesia and Malaysia.

It is vital for SMEs business owners to know their financing options. Even though not many SMEs are aware of the alternative financing options, Funding Societies together with other B2B Fintech incumbers are working together to educate and empower SMEs. (Source: e27)

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