In today’s interconnected society, we expect the world to be at our fingertips. Apps enable us to do business, shop online, or move money with a few swipes of a forefinger.
This expectation has grown in the digital financial world, especially as tech develops to connect more countries and systems globally. But there are some tedious aspects to online banking that are unfortunate holdovers from the past — particularly for SMEs. Doing international business means putting up with outdated banking portals and struggling to manually reconcile transactions across currencies.
Traditional corporate banks haven’t evolved these processes to support nimble, modern customers.
But Fintechs have.
Here are three ways these Fintechs — and their global customers — are disrupting corporate banking and waving goodbye to traditional banking’s manual processes and delayed payouts.
#1: Catering to digital native businesses
An increasing amount of the global workforce are digital natives, people under 40 who largely grew up in an internet and connectivity-dependent reality.
Operating with this mindset, young business leaders expect that things like payment processes should be lightning-fast. And why not? Why go to the bank again when you can check your balance on your phone? In a world where we’ve transitioned to work remotely, why can’t every business accept digital payments?
When digital natives start companies, they often aim to create a better, tech-oriented solution to replace an outdated process. For example, businesses at the intersection of healthcare and technology may strive to make better telehealth a reality. Tech-focused, digital companies are biased towards seeking simpler solutions by nature of their work and look for financial systems that align with an optimization mindset.
Fintechs have a sweet spot: they understand the pain around traditional banking bureaucracy, manual processes, and lending delays, and they align with company missions to create more efficient technologies. They attract newer SMEs that are digitally native, rather than large Fortune 1000 companies.
Companies that operate entirely online have no borders. They demand painless transactions and financial capabilities to help retain international customers and reach new markets. Fintechs are designed to attract digital natives looking for seamless digital tools and to fill this gap that traditional banks struggle to fill.
Corporate banks are discovering that they need to radically digitize and pivot their audience focus — or lose huge swaths of young business.
#2: Prioritizing automation for accounts payable & receivable
Getting paid quickly and efficiently is huge for international businesses. How much time does the average company waste tracking income, making invoice payments, and keeping the books up to date? The older commercial banking structure makes it hard to accurately track and manage thousands of transactions moving around the world, even if you have one central portal to work from.
Fintechs know that, despite a thriving business, many finance teams still manually enter data into a payment portal managed by a traditional bank. This leads to wasted time and money across the board. Employees can spend the majority of their day just processing payments. Teams may be using a spreadsheet to keep track of everything—if they’re lucky, a bank may be able to adjust the CSV file for payments or process a CSV from QuickBooks and upload through the portal.
Modern digital banks present this as a huge opportunity to boost ROI for customers.
They’ve evolved to give customers better all-in-one platforms that eliminate portal headaches. Customers enjoy a real-time view into account transactions and up-to-date, automated reconciliations across currencies. If businesses can automate around 50% of the effort they were wasting, they stand to regain a substantial amount of revenue and brainpower to use on bigger and better things.
#3: Restructuring lending processes
Getting venture capital and loans in the traditional way can be complex for small companies, SMEs, and certain startups who want to go to market quickly. Traditional banks rely on financial statements and can take between 1-3 months to facilitate a loan.
Now, there are a lot of alternate providers who are reshaping how lending works through smarter data. Fintechs gather data from various sources to determine their client’s value quickly. With the ability to analyze sales on Shopify, Amazon, or Stripe, smart lending companies use their own risk model that analyzes all revenue streams at once for a holistic view of the client. Smaller businesses have a better chance at funding and faster turnaround time from this new type of financial institution that understands where the system fails entrepreneurs.
To stay competitive and committed to filling gaps in the international arena, Fintechs stay on the bleeding edge of innovation with tools like Currencycloud. Currencycloud’s platform allows customers to collect, convert, pay, and manage multiple currencies in a single automated system. Start your borderless payments journey today.