Finance Monthly - December 2022

Finance Monthly. 20 Bus i ne s s & Economy problems have left experts suggesting a looming recession on the horizon, as global markets tumble and central banks are unable to tame rampant running inflation. Taking what we have learned from the pandemic, banks, as well as small businesses will need to incorporate more adequate digital banking solutions in the coming months as macroeconomic uncertainty starts to shift consumer behaviour and investor sentiment. Digital banking stretched farther than traditional fintech tools, and today a range of services and products exist to specifically help SMEs overcome challenges that they face within their sector and the financial industry. Digital funding Digital funding seeks to resolve the issues relating to SMEs that require additional funding from their financial provider. Digital funding would mean that both banks and their employees will have more transparent access to SME loan application information. This would enable banks to process requests for funds faster and more conveniently. With the use of digital funding capabilities, small and mediumsized business owners, including entrepreneurs will not only access the funding or financial resources they require, but it helps to speed up the loan process, speed-up credit issuing decisionmaking, and minimise potential complications. Online payments and digital wallets American consumers make an average of 35 payments each month, with more than half of those payments including debit, credit, and prepaid cards according to findings by the Federal Reserve Bank of Atlanta’s 2020 Diary Of Consumer Payment Choice Report. On top of this, research by PYMNTS suggests that on average a consumer now conducts at least two transactions online each day. Among these transactions, 17% of consumers make purchases of retail products online, and 17% purchase food and groceries, with a little more than a fifth using their bank’s sites or app each day to complete transactions. The growing need for online payment systems, including contactless payments, QR codes, and digital wallets would mean that small businesses will need to increase their awareness of how their customers pay for goods and services. For long enough cash has reigned king, and while it does still hold some sort of influence, in the long term, and considering the potentially troubling financial times ahead, SMEs will need to maximise digital payment options through smart and innovative inclusions in their business model. Consumer segment targeting Already we see how companies can target consumer segments within the marketplace through the use of analytical data points provided by social media and online tools. Though these efforts are also becoming more present in the digital banking ecosystem, where banks can establish digital channels that can help run and operate specific campaigns directed toward a target audience. These efforts would mean that banks will then be able to provide their customers, in this case, SMEs with relevant information. Businesses will have better access to consumer information in terms of spending behaviour and trends, helping them to adjust their nearterm strategy. It might not be a primary service that banks can provide their SME customers, but in the interim of financial uncertainty and changing economic cycles, it could mean that smaller businesses can remain financially profitable while retaining clientele. Cash flow management Typically small business owners will capture cash flow information through a third-party accounting system or manually capture the daily data. Though specific programs and tools already exist within the digital space, for SMEs it would mean either buying a completely new product or employing someone to complete accounting tasks. In this case, for many small businesses, it would only result in additional capital that could rather

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