Micro, small and medium enterprises in India have reported massive growth in the last decade and are continuing to grow and flourish. With the supportive schemes of government, easier loans, and financial aid along with constantly advancing technology, the MSME sector has truly become the backbone of the Indian economy.
According to IBEF, the number of MSMEs in India increased by a CAGR of 18.5% from 2019 to 2020 and it currently accounts for 27% of India’s GDP.
Also, the gross value added from micro, small and medium enterprises across India saw a growth of nearly 13 percent in the financial year 2019. MSMEs contributed over 57 trillion Indian rupees to the country’s total gross value as per the reports by Statista.
Even though MSMEs have grown tremendously, the road hasn’t been easy. There are many challenges these enterprises have had to overcome and there are still many challenges that need to be addressed.
Here’s A Quick Look At Some Of The Major Challenges Being Faced By MSMEs:
- Insufficient Working Capital
MSMEs or any other business needs specific capital to keep up the operations. Unlike some mega businesses, MSMEs usually require smaller capital but against the emerging number of MSMEs in India, the banks can only meet a fraction of this demand. Therefore, MSMEs can’t be too dependent on banks to meet their working capital requirements. Instead, they have to find a way to optimize their cash flow better with the help of technology like a business wealth management platform so that they can figure out savvy ways to never run out of cash.
- Lack Of Financial Understanding:
Starting a business is one thing but having sound financial know-how is a different ball game altogether. Lack of financial knowledge is one of the biggest roadblocks on the way to success for most MSMEs. Many times, business owners are unable to understand their finances, evaluate where their business is draining money, and fail to have a clear idea about their cash flow.
- Insufficient Use Of Technology:
Even though there have been many technological advancements with the introduction of financial technology, artificial intelligence, machine learning, big data, and business wealth management platforms, MSMEs haven’t made the most of them yet. The insufficient use of technology has been one of the major challenges that is affecting business operations, accounting, supply chain, etc.
While these challenges are widespread across the MSME sector in India, fintech is emerging as a technology empowering and strengthens the sector. But what is fintech and how it is helping the MSME sector with their business wealth management?
Let’s discover it in the following segments.
A Bit About Fintech
Fintech or financial technology is a multi-billion dollar industry reshaping economies across the globe. To put it in perspective, let’s ask ourselves these questions:
- Have you ever made a transaction through your digital device like a mobile or computer?
- Have you checked your bank statements through your phones or laptops?
- Have you ever transferred money using an app?
If the answer is yes, then you are already a consumer of the fintech industry! It contains everything from cashless payments, online banking, crowdfunding platforms, virtual currency, AI-driven platforms, and whatnot!
According to research by Accenture, global investment in the fintech sector has added up to $100 billion since 2010. In 2017 alone, fintech investments registered an 18% surge, as more people are moving towards online banking, digital payments, and online wealth management.
Business wealth management is one such aspect that’s being revolutionized through fintech. It is a blessing in disguise for MSMEs that can not afford a team of financial advisors like some multinational businesses. Fintech is making business wealth management accessible, affordable and efficient for micro, small and medium enterprises. Let’s understand how.
How Fintech Is Reshaping Business Wealth Management For Small And Medium Businesses?
Making MSMEs Financially Independent:
The DIY phenomenon has accelerated especially post-COVID. Rather than getting things done, more and more people are focused on doing things on their own. For example, the process of pitching a product or service, demonstrating it, and making endless cold calls have been replaced with consumers coming to your website, selecting the products/services they want, and placing orders.
Fintech is bringing the same kind of change in terms of business wealth management for micro, small and medium enterprises. Thanks to fintech, MSMEs, or any business for that matter, now do not have to look at a financial manager, financial analyst, or relationship manager to overlook their accounting, transactions, investments, etc.
Instead, with wealth management platforms, businesses can optimize and analyze their business transactions, accounts, and investments all on their own!
Reducing The Scope Of Errors:
Harvard Business Review has stated in one of its articles that business expenditures or spend reconciliations along with payment authorization are two areas that are highly labor-intensive and require a lot of time and effort in accounting.
More dependency on manual work can multiply the chances of human errors. Faulty accounting, inaccurate predictions, errors in cash flow, etc., can jeopardize business growth. With fintech tools, MSMEs can easily stay on top of their finances, bring more efficiency and simplify their otherwise complex financial functions and operations.
Providing Ease Of Investment:
More often than not, businesses have surplus cash sitting idle in their bank accounts. They don’t usually realize it until a transaction comes up. Rather than letting this cash sit idle, businesses can invest it to earn fair returns over time and eventually grow their business wealth. Fintech facilitates business money investment by providing easy access to investment options, online authentication & verification, online money transfer & payments, etc.
The market has changed and so have consumers. Your target customers are adopting technology faster than ever before and it’s time you should too! To keep up with the pace of technology, adopting to a dynamic market, and stay ahead of the competition, businesses, especially MSMEs need to adopt a plethora of technologies available for them, fintech being one of them.
Introducing Shootih: The Ultimate Wealth Management Platform For Businesses
Shootih is leading the way for fintech in wealth management for businesses in India. It is an AI-based platform that has truly revolutionized the way businesses are managing their wealth. With features like an analytical view of multiple transactions on a single dashboard, identification of idle cash, multiple mutual funds investment options for investing a business’ idle cash, etc., Shootih has truly simplified the otherwise complex procedure of business wealth management.
Shootih offers:
- Access to all kinds of asset classes best suited for corporate investments.
- Consolidated view of all investments on one single screen.
- Immediate notifications for any unexpected bills, overdue payments, or out-of-cash predictions.
- AI-based suggestions for investing your idle cash over holidays or weekends.
- Invite your financial advisors, CFOs, CA, and other team members to collaborate on a single platform to ensure maximum transparency.
Fintech is going to transform the future and with Shootih, MSMEs can keep up with the race of transformation!
