The events of 2020 have brought into sharp focus the disparity in business support systems that Canada boasts. Ipolitics.ca report that the CAN$65bn government business loan scheme has left many small and medium sized enterprise (SME) in the lurch, with big banks reticent to provide funding. Into this void have stepped fintech companies that are providing a lifeline for those businesses in Canada who have found themselves without the resources they need to keep the doors open. In the long-term, this could shake up the face of business financing as a whole.
Appreciating the small stuff
While Canadian SME businesses are, on their own, small contributors to the wider economy, they become a force to be reckoned with when combined. SME account for 97.9% of all jobs in Canada, and 41.9% of its exports. Most interestingly to fintech, they also drive innovation due to their willingness to adopt new technological trends in an agile fashion. Finetch companies appreciate this contribution that SME makes to the economy, and have been recognised overseas; the Globe and Mail report that, in the USA and UK, national governments have asked fintech to make significant contributions, raising questions as to why this isn’t yet happening in Canada. Fortunately, fintech companies in Canada have taken the initiative to bridge this gap.
Advantages for businesses
The answer to how to meet this challenge lies in the application of financial support. Whereas big banks rely on larger sums distributed in the old-school fashion, fintech lenders often use smaller amounts, delivered more frequently, and through entirely digital means. Applications, lending, updates and correspondence can all be filled digitally and, increasingly, through the sorts of push notifications that you might more readily associate with social media. This means that SME can have access to direly needed funding at a much quicker rate than normal, and in a way that’s far more tailored to their approach.
A fintech future?
In the financial future, this way of doing business may well become the norm. Even big banks need to adapt to the changing needs of businesses; they could benefit in more ways than one. According to a number of Toronto based financial experts in TechCrunch, automated finance and AI may be a necessary next step in the future of financing. Why? Being able to anticipate the needs of SME is a huge priority, and being pushed out of the market by smaller more agile fintech start-ups requires a change of plan. Leading this change will be augmented reality and AI systems that can help to discover business needs as soon as is feasible, making a far more flexible and change-oriented financial ecosystem.
That flexibility is key to why fintech is helping to create real solutions for SME. Old school ways of working simply don’t cut it any-more, and that’s showing in the current financial climate. Adapting is the only way forward, and embracing small-scale fintech led lending is that route to further growth.