The Future of Small Business Finances: Technology Transformation

Unless you have been living under a rock, you will have seen the rise of technological advances such as AI, blockchain and machine learning. Whether you stand with traditionalism or not, technology is the future – and as a small business owner you need to be ready to transform with the times.

There are several parts of finance technology – also known as fintech – that will be important to small businesses as well as larger multinationals. You might not know much about the advances in this sector, but it could make the difference that sets you apart from your competitors. In this way, embracing change is an important part of business growth.

With 33% of small business owners losing sleep because they are worried about the financial health of their companies can you afford to ignore the future of fintech transformation?

Banking in the 21st Century

We have come a long from basic cash-based businesses. Whilst digital payments have been favoured, small businesses still utilise cash-based transactions and business checks. This may leave you with some business check questions, and how they are an integral part of small businesses. Online options are becoming more and more important.

Open Banking

The first, and potentially widest-reaching, part of the future comes from what is known as ‘open banking’. This is a regulatory initiative that means third-party developers are able to build services and applications to make managing business finances simpler.

This is the technology that allows you to use accounting software to help you run your business and link it to your bank account, for example. It is also how you are able to use contactless payments on your smartphone.

Alternative Lending

Financial organizations are all about thinking outside the box these days, as there are so many competitors like banks looking to get more customers.

As business customers begin to seek alternative solutions, especially when traditional financing options are difficult to access, there are alternative lending solutions such as crowdfunding and peer-to-peer lending that can make a difference.

Online Payments

We have already mentioned that while cash is still used, it is not the preferred method for a lot of consumers, so exploring different payment options is important for growth.

There is, and probably will be for the foreseeable future, a lot of discussion about the viability of cryptocurrency as a payment option. While the decision about whether crypto is safe for you is completely subjective, there is no denying the risk involved – so bear that in mind.

However, offering online payments, including through eWallets like PayPal and Venmo, will give your customers more ways to purchase, which is never a bad thing.

Blockchain and The Cloud

Big server banks in a room are becoming a thing of the past for many businesses. Instead, the proliferation of cloud storage and other services can streamline your offering and ensure that you can still have real-time access to data.

Many small businesses that make use of accounting software to manage their books are using cloud-based applications to do this – which can lower costs.

Another important factor in this is blockchain. For massive data access, as well as machine learning, analytics, algorithms to help detect fraud, and AI-based automations for everyday processes.

The other big plus of using blockchain for databases and other services is that it offers enhanced transparency, seamless interactions, and security.

Don’t Forget Cybersecurity

The less glamorous side of having all of your business online and in the Cloud is that there is much more danger from online fraudsters and hackers. It is up to you, as a small business owner, to protect your financial and customer data, which means that you need to ensure you have excellent cybersecurity in place.

In 2023, 1 in 3 small businesses suffered a cyber-attack, some costing as much as $7m – and even without the financial cost, the news of data theft can do irreparable damage to your reputation and the trust your customers will have in you.

Invest in firewalls, in solid encryption, and in multi-factor authorisation – and keep up to date with latest threats.

also read: The Crucial Role of Real Estate Agents in Today’s Housing Market