Start-ups are known, to need as much support, as they can get, so, having fintechs and banks support, would go a long way, in improving their businesses.
Financial technology, (Fintech), is used, to describe new tech that, seeks to improve and automate the delivery and use of financial services.
In addition, banks, on the other hand, are financial institutions, licensed to receive deposits and grant loans.
How, then, can these two institutions, work to collaborate, with SMEs, to grow?
Improve Credit Assessment For SMEs
What makes many small businesses small is lack of adequate funds, to push all the aspects of the businesses, in the first few years of operations.
Does this mean that they need funds from investors, banks, friends and family in order to make up for this?
Banks can make this easier on the SMEs, by improving the processes for accessing loans, by them.
These include reducing interest on loans and put in place, policies that, give small businesses easy access to credit.
Fintech has made online lending simple and fast, thus, boosting the popularity of this option, even, for small business owners.
Flexibility With Collateral Requirements
One reason, many small businesses run away from taking bank loans is the collateral demands.
Many small businesses cannot afford, to go through, with the collateral demands placed on loans, by banks, which are usually landed properties, or, other assets.
Relaxing the requirements and being flexible on these, for small businesses, would enable them to access loans for use in improving their businesses, which can now grow, at a faster rate.
Investing In Financial Literacy
How can small business owners optimize the potentials of banks and fintech organizations, if they do not know how to do that?
It falls on the shoulders of financial institutions, to educate the masses, on what they stand to gain, by accessing loan facilities from them.
This, in turn, improves the businesses for small business owners and the financial institutions, as well.
I am sure that, if the above are looked into and done carefully and properly, we will witness more start-ups, or, SMEs, growing faster, in leaps and bounds.
Are there other ways fintechs and banks could collaborate for SMEs support? Let us know in the comment section below
You can also read up SMEs and Start-ups growth in Africa through partnership.
Featured Image: housers
Don’t miss important articles during the week. Subscribe to cfamedia weekly newsletter for updates.