Fintech and Data Synergy For UK SMEs

In today’s business world, where the digital landscape is ever-evolving, data stands as a pioneering force. Its transformative impact resonates across sectors, but for the UK’s Small and Medium-sized Enterprises (SMEs), navigating this complex data environment presents both a challenge and an opportunity.

The British FinTech company Payrow offers financial solutions to SMEs and startups in the UK. In a discussion with TechRound it recently explored the types of data vital for businesses and looked into how FinTech aids small and medium enterprises in extracting and analysing this information.

The Role of Financial Data in the Success of SMEs

SMEs make up roughly 90% of all businesses globally and account for over 50% of employment worldwide, as per the World Bank. SMEs act as the growth catalysts for much of the global economy, being hotbeds for innovation, development, and employment.

However, many face shared hurdles throughout their lifecycle, such as restricted access to capital and funding, a dearth of financial expertise, challenges in managing cash flow and budgeting, and constraints in harnessing data due to the prohibitive costs of tech infrastructure and the specialised skills needed for data analysis.

The data a business encounters can vary immensely. It might encompass transaction details, product metrics revealing stock levels and sales results, price dynamics for components and contractor services, employee salary payments, and a company’s income and expenditures.

SMEs can also gain significantly from data by revealing hidden patterns and market tendencies, thereby allowing for informed decision-making that offers a competitive advantage, improved profitability, reduced expenses, and modified partnerships. Having the financial acumen and resources to craft cash flow prediction and monitoring systems can offer businesses an effective early warning setup.

The FinTech Epoch

It’s becoming important for small and medium businesses to utilise advancements in data analytics tools to garner insights, make informed decisions, and boost outcomes.

Although traditional banks recognise the potential of data, there’s a significant gap in its application. According to thefinancialbrand.com, even though 65% of conventional banks view data as a primary asset, a significant number confess to losing clientele due to their inability to transform this data into actionable insights for SMBs. Furthermore, only 20% of business banking budgets are allocated to SMEs.

FinTech services, which are more agile and technologically advanced than traditional banks and also more cost-effective, present a tantalising option for SMEs. Data is becoming a pivotal arena in the small and medium business market and the main juncture where high-street banks are vying with fintech.

Thanks to fintech companies, businesses can now tap into digital financial services to optimise their financial management processes. Additionally, the integration of digital solutions allows them to make data-driven decisions, using analytics to gain insights about their financial activities.

According to an EY study, SMBs have become “more digitally inclined” regarding their banking expectations, with 46% expressing dissatisfaction with banks’ manual and paper-driven onboarding methods.

Strategising Growth Through Data Mastery

Besides the need to amass information, it’s essential to adeptly analyse and employ it, and this is where FinTech services shine.

Given the current fragmented digital sphere, businesses are wrestling with a plethora of data sources. This amplifies the need for platforms that can amalgamate, streamline, and decipher this information. With a toolbox fashioned for centralisation and streamlined financial management, such services furnish businesses with a comprehensive view of their financial terrain, setting the cornerstone for informed strategic decisions.

According to Payrow, especially for burgeoning businesses, mastering these intricacies isn’t just about survival — it’s about setting up a foundation for sustainable growth. Here are some paramount aspects every startup and SME should be privy to:

• Periodic and Non-Periodic Expenses: For SMEs and startups, vigilant monitoring of these is essential for fiscal health. Tools offering a detailed view of this are invaluable
• Ownership Frameworks in Startups: Contemporary startups frequently have multifaceted ownership frameworks involving several stakeholders. In such setups, ensuring fiscal transparency and responsibility calls for advanced solutions
• Managing Recurring Payments: Regular operational costs can be a considerable resource drain if not judiciously overseen
• Conversion Rates: These offer behavioural insights, allowing businesses to observe real-time performance and retrospectively analyse past feats. Recognising preferred payment modes lets firms enhance their payment procedures
• Decline Reasons: Pinpointing the causes behind transaction rejections can shed light on both user-centric issues and internal hitches. Addressing these can augment success rates and minimise cart abandonments
• Authorisation Rates: These can guide businesses in determining the best payment provider for specific transactions, particularly crucial for international firms
• Payment Reconciliation: Picture a world devoid of transaction reconciliations. Tech has modernised this domain, enabling automated reconciliations that ensure precision and nullify mistakes. Reconciliation is a process that juxtaposes a firm’s financial ledgers with bank or payment provider statements to guarantee accounting accuracy. This procedure detects any variances, errors, or irregularities, upholding the sanctity of financial data, which is paramount for judicious business decision-making

Harnessing Technology: The Catalyst for SMEs’ Financial Prowess

SMEs must keep abreast of the latest technological developments in their sectors to stay ahead. Technological progress can bolster efficiency and output, leverage data for decision-making, amplify communication and collaboration, enhance access to global markets, and refine client interactions. This is intertwined with financial literacy, fostering effective financial management using accounting software and the newest payment portals and online transaction tech.