The Integral Role of FinTech for MSMEs

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Small and medium-scale businesses typically face several challenges on their paths to success, but have you ever wondered what different industries would look like without the presence of MSMEs? Accounting for 27% of India’s GDP, MSMEs play an indispensable role in our economy’s functioning by increasing employment in a wide range of industries.

But as MSMEs focus on their journeys of growth, they are often faced with several mundane business operations that can severely hamper their productivity. Finance management is one such responsibility that typically involves a lot of manual effort and monotonous tasks. That’s where FinTech steps in to take over these processes. Have a look at the integral role of FinTech for MSMEs:

  1. Better access to credits and loans

    Because MSMEs are still setting their firm footholds in their respective industries, they are viewed by traditional lending institutions are “risky” borrowers, which makes it difficult for them to secure loans and credit required to build their business. Also, there are few accessible platforms to evaluate credit risk, which makes the situation worse for MSMEs. FinTech platforms help with efficient risk assessment, which can improve MSMEs’ prospects of having their loans secured. It also provides them with the opportunity to have better credit access

  2. Increased productivity at the workplace

    One of the major challenges MSMEs face is the necessity to perform monotonous tasks manually for the lack of a better alternative. As much as these tasks may be highly mundane, they are an unavoidable part of business and may require employees to devote several working hours to completing them. Finance management involves some of the most mundane and repetitive tasks that can bog down employees in MSMEs and prevent them from thinking on the lines of business growth. FinTech platforms automate these processes, reducing time and effort and promoting business development. For example, if we consider ERP integration, the manual process is quite arduous, although necessary. Premium FinTech applications automatically integrate with the business’s existing ERP software system, which makes the process considerably easy.

  3. Flexibility to use funds as per requirement

    Another important advantage of FinTech for MSMEs is that they are usually very flexible; therefore, they allow users to utilize treasury or bank funds at an invoice level exactly as per their requirements, instead of leaving them with no choice. In other words, FinTech platforms are designed to consider individual MSME financial needs and provide the required assistance catering to these requirements.

  4. Heightened security

    A major concern for businesses is the security of their financial information, which is also why many MSMEs are skeptical about going entirely digital with finance. But the good news is that the best FinTech applications are backed by cutting-edge technology, which ensures that the platform is highly secure and the financial information stored in the system is inaccessible to anyone other than the users of the application.

  5. Customized reports and dashboards

    Whether it is reviewing overdue invoices or checking credit utilization, FinTech platforms allow users to perform all of these activities under one hood through user-friendly dashboards and customized reports. These reports provide extensive information on payables, receivables, etc. and are incredibly easy to understand; therefore, they can be accessed even by those with less or no technological knowhow.

Over the years, the MSME sector has grown exponentially, increasing the total valuation of several industries in India. At the same time, FinTech has also exhibited parallel growth, becoming an indispensable part of finance management for tens of thousands of individuals and entities. In this scenario, the MSME sector has begun relying on FinTech to manage its financial processes better and ascend in its journey, whereas the FinTech sector’s reach has grown significantly with MSMEs entering the picture and availing of FinTech services. We at Zuron are dedicated to helping small and medium-sized businesses to expand in their endeavours, providing them with the necessary guidance and simplifying their finance management processes. If you are part of a budding MSME and are looking for assistance with financial management, we would love to connect with you. Click here to know more about our FinTech services!