Here’s Why FinTechs Are Failing to Meet the Needs of SMEs
Less than a month ago, Fintech Week arrived in London with a bang, attracting hundreds of delegates from across the biggest FinTech organisations across the globe. Here Anthony Persse, Director of Strategy at Ultimate Finance, talks Finance Monthly through the challenges FinTechs face in delivering services that meet the needs of small to medium ventures.
A packed schedule awaited them, with ‘hackathons’, insurance innovation showcases and discussions on blockchain. What struck me when looking at the programme was the total absence of the word ‘customer’.
Not one talk, panel or roundtable event was planned to discuss what those using FinTech products actually wanted from the sector. Perhaps the recent successes and the incredible influx of investment has led the industry to believe it has it right already? It’s an easy assumption to make; FinTech is growing at a rate of knots, forcing the banking giants to sit up, take notice and fight to get their piece of the pie.
But, in the SME sector FinTechs are not having such a big impact and I think it’s because they are failing to ask that all important question – what does my customer need from me? Our recent research showed that the majority of SMEs in the UK still look to their main bank for financial support, even though the same research showed that small business owners didn’t feel their bank could always offer them what they needed. It’s a gap that needs filling, but it doesn’t look like FinTechs will be the plug.
That does not mean that technology does not have a huge part to play in the SME funding sector. Through an advanced online platform and a smart use of data, we were able to launch one of the fastest loans on the market, offering savvy SMEs who know what they need the option to access quick cash in an instant. We are continuing to develop our online capabilities because some SMEs do want a digital solution – it suits their needs.
And some need more of a helping hand. A human at the end of the phone who can sympathise, offer credible guidance based on their experience with hundreds of other SME customers and work through the funding options available. Those SMEs might lack experience of borrowing while others might have hit a patch of tough trading and simply not know where to turn. For these small businesses, an app isn’t going to cut it.
So will FinTechs ever meet the needs of SMEs? The answer is yes, and no. Some SMEs will find the agility that FinTechs offer works for them and that they can save money as online-only services can be cost effective. But ‘people do business with people’ is an old but still very true adage and it’s my opinion that lenders which offer a truly fair and flexible service, aligned to what SMEs really want and not what we think they want, will play an increasingly large role in the support of UK small businesses.