AI-powered transformations in fintech for small businesses: Shaping the future of SMB financing


By Pravas Chandragiri 

In India, small and midsize businesses (SMB) form the backbone of the economy and a key contributor to the nation’s GDP. According to the data of the India Brand Equity Foundation (IBEF), India has 63.4 million businesses spread across the country that contribute 6.11% of the manufacturing GDP and 24.63% of the overall GDP. In order to grow, these SMEs require quick access to finance, and currently, India is facing a credit gap of Rs 25 trillion, according to a report by BlinC Invest.

However, this challenge has been identified by emerging Fintechs, who have been striving to bridge this lacuna of credit with their innovative solutions. By harnessing the power of artificial intelligence (AI), they are reshaping the landscape of SMB financing. They are providing easy access to capital to these SMBs, making bill payments easier and speeding up the time to access the credit.

Enabling easy access to credit

For several new small businesses, gaining access to credit is a challenge owing to little or no credit history and the stringent requirements of traditional lenders. However, the existence of these new-age Fintechs has been beneficial for SMBs. These firms leverage AI algorithms that go through vast amounts of data to identify patterns, preferences, and risk profiles, which makes it easier for lenders to anticipate clients’ needs. Then this data is utilised to tailor the financial solutions to cater to the specific requirements of the businesses.

Making bill payments easier

Thanks to technological advancements, long gone are the days of hardcopy bills and daunting stacks that requires vigorous sorting. Fintechs have empowered business owners to track their transactions or credit at their fingertips via their comprehensive application. Automatic draws or notifications ensure businesses never miss a payment, and it helps them allocate their capital in a better manner. The Fintechs have also been helping small businesses streamline their invoicing by enabling them to issue digital invoices to retailers, which has transformed the way transactions are recorded, monitored, and maintained.

Speeding up the time to process credit 

Fintechs have accelerated the time to process the credit for the SMBs. By using AI algorithms, the loan origination systems have become more efficient as they automate manual processes and reduce turnaround times (TAT). The system analyses the credit history and applicant data to assess the creditworthiness of potential borrowers. Moreover, AI algorithms can be customised by fintech companies so that businesses are pre-approved in no time. Furthermore, several hurdles, such as the requirement of a large amount of paperwork for loans, have been cleared, which has made businesses attain credit in a swift manner.

All things considered 

Technologies such as AI have transformed business operations for Fintech, which in turn is reshaping financing for SMBs. It has not only enabled easier access to credit for small businesses but has also made billing easier and accelerated the speed of loan disbursal. As we move forward, the AI technology is anticipated to get more sophisticated and accessible, which will further be beneficial for SMBs and Fintech companies alike. As small businesses get easier access to credit, it will help them grow and ensure their economic stability.

The author is founder and CEO, Soptle

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