During our recent attendance at the Xero Roadshow Asia 2017 as an ecosystem partner, the TradeGecko team gained some valuable business insights. During the event, guest panelists from PayPal, Visa, and UOB highlighted how Fintech solutions will play a crucial role in the success of many small and medium enterprises (SMEs).
What is Fintech?
The clues to what Fintech is and does lie in the word itself. Fintech (or financial technology) refers to the marrying up of two major business commodities. It refers to the delivery and design of financial services that are enabled and utilized through today’s developing mobile, big data, and online technologies. According to the World Economic Forum, “The application of fintech cuts across multiple business segments, including lending, advice, investment management and payments.”
Fintech is a booming market
The Fintech market is growing at a phenomenal rate and the exciting news for SMEs yet to onboard is that it still has a long way to grow. According to Accenture, Fintech investment has grown globally from as little as $930 million in 2008 to a staggering $12 billion at the start of 2015. With the highest rate of growth (215%) taking place in Europe, that region alone has seen increased Fintech trends accounting for a total of $1.48 billion in 2014. More recent studies conducted by Business Insider show that global fintech funding hit $15 billion by mid-August of 2016.
Fintech and PayPal
Apart from being one of the most prominent brands in the global financial sector, PayPal has continued to demonstrate how flexible and adaptive they can be in a fast-paced environment. While having their roots in eCommerce payment technologies may make them a seasoned veteran among fintech companies, they haven’t been standing still.
Through focusing on eCommerce technology and building the trust of their millions of global users, PayPal continues to succeed in providing seamless Fintech solutions. The company has invested heavily in the type of financial service technology that has proven to minimize clicks and maximize sales through drastically cutting down on incidences of shopping cart abandonment.
What’s more, in 2016, PayPal launched their incubator program. Held in PayPal’s Singapore Technology Center, the initiative aims to develop and nurture “the next generation of fintech startups”.
Fintech, Xero, and UOB
In 2016, Xero announced their first Asia bank feed integration with UOB (United Overseas Bank) for small businesses in Singapore. "This means the small business customers who bank with UOB in Singapore can now seamlessly integrate their bank accounts with Xero and have their bank transactions sent automatically from UOB to Xero every day through a secure connection."
Visa and Fintech
Visa didn’t arrive at the forefront of the card payment market by accident and this household brand has become increasingly adept at balancing the challenges of online payment security with easy and seamless mobile payments.
By utilizing systems like tokenization with market innovators such as Uber, the company continues to use behind the scenes Fintech that embraces the growing mobile payments market. In an update from Bill Gajda, SVP of Innovation & Strategic Partnerships of Visa Europe, celebrates their latest developments.
Last year, we successfully enabled millions of Visa cardholders to take advantage of the expansion of Apple Pay and Samsung Pay as it launched throughout Europe. We also launched the Visa Digital Enablement Programme to make it faster and easier for banks who use the Visa Token Service to join these third-party payment services.
Visa expect to continue their innovative developments, particularly utilizing mobile tech in the development of digital payments.
Learning Fintech solutions from the market leaders
From addressing the barriers that businesses and customers may put up concerning changes, through to facilitating a positive mind shift, PayPal, UOB, and Visa offered the following words of wisdom at the Xero Roadshow Asia 2017:
Fintech advice from PayPal
PayPal suggested that being open to how things can be done differently was a good place for the SME business to start. They pointed out that standing still, or even moving backwards, was not an option. This forward movement doesn’t have to mean that everyone involved will onboard at the same time however. In fact, it is likely that the next steps will be taken at different stages by different user groups and businesses.
Fintech advice from UOB
The idea or myth that Fintech will decimate workforces through increased automation was dispelled by UOB. They advised that it was more a matter of better utilizing manpower in other more profitable areas of the business, allowing the same resources to increase profitability. Rather than downsizing, SME owners would have the opportunity to shift their human resources to areas of the business where they could be used more efficiently.
Visa’s Fintech advice
Visa suggested that SME business owners should “get into digital” especially when it aligns with the core of their eCommerce business. They touched on the fear factor by pointing out that only 10 short years ago, there was no such device as an Apple iPhone, yet now people are barely able to function without one. They stressed that it is the same story with B2B apps and utilizing cloud-based Fintech solutions.
Advice for Fintech startups
Whether you are running an established and growing business or considering a Fintech startup, the challenges concerning the cost of customer acquisition and retention go right across the board.
The next wave of new business blood and their customers (millennials) are already familiar with these evolving technologies. This means that SME business owners will need to start working on solving the needs of the new marketplace in a more digitally focused way. The three panelists offered the following advice to potential Fintech startups.
PayPal advised owners and entrepreneurs to work with connected advisors and make use of government assistance programs in bringing their new ideas to the market. They summed up their advice in a single takeaway keyword – collaboration.
UOB suggested thinking about the current and future pain points of the market, and also highlighted collaboration as a key factor to SME business success. They further cited the example of the FIN lab joint venture between themselves (UOB) and the Singapore government.
Visa emphasized the “need for speed” and the “3 click rule” of online eCommerce, pointing out that unless your customers can achieve their purchase within three clicks, they will be gone and their money with them.
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