Jason Simon explains how FinTech is helping SMEs achieve new success

FinTech is a sector with significant growth in the country. Only in the last year, it had an annual increase of a quite exponential percentage and around the world, many companies of this type began to be established. This growth is something that should not only be celebrated by the sector itself but also for others, such as small and medium-sized enterprises (SMEs), that have benefited from it. Jason Simon, an expert on all things FinTech, provides detailed information on how SMEs are getting a great deal of support for their development from the emergence and growth of the segment.

There are two segments that stand out in the FinTech ecosystem, Lending and Payments. This is very relevant for SMEs, since access to credit, and in general, to financing mechanisms, has been one of their biggest problems for years. Many times, it is the main factor of their bankruptcy or their inability to grow. “In other words, there is a latent need for companies that have been left behind by traditional financial institutions that are being met by FinTech companies,” explains Simon.

This sector of financial technology companies can be the determining factor in transforming SMEs in two ways: by providing them with credit, payment methods, and other services so that they can offer them to their own customers. Simon points out, “An SME that did not have access to credit can now have it since the process for obtaining credit and the interest rates offered by FinTechs allows small and medium-sized companies to find access to loans that were previously almost impossible through traditional banks.”

Today there is an upward trend in terms of digital banks, as well as a wide range of wallets. This is causing more and more people to stay away from traditional banking services, as they are no longer indispensable to make a deposit or a payment; everything can be done from an application, backed by a FinTech.

Imagine a person who went to a restaurant to eat, and while he was getting his meal, he went to a FinTech application, and in 30 minutes, he had his card in his hand. Five minutes later, he activated it and made a simple deposit to pay the bill in that restaurant with his new card. If this is translated to an SME, it’s easy to understand the true importance of FinTech. It is in their DNA to make everything more agile and more convenient.

Everything FinTech does today could be done by traditional banks, but they are not doing it; that is why these companies are revolutionizing the way credit is granted and the way we pay. “SMEs should learn from FinTech to challenge the state of how things are done. Normally small and medium-sized companies find a place and have a hard time moving from there; that’s precisely something they have a hard time understanding; they don’t challenge the status quo,” asserts Simon.

Markets, consumers, and everything in the world is moving, which is why SMEs must get on this train. FinTech, in turn, must learn the resilience of SMEs. SMEs endure and endure a lot. No matter how many times they fall down, SME owners are always ready to get up. Many startups in ecosystems like FinTech die along the way and no one seems to care, and this is a dynamic where we can all go wrong. The most important thing for them to succeed is to have a very clear vision and absolute resilience.

The fact that FinTech exists does not mean that SMEs will leave traditional banking; it is a bit naïve to believe this. We are still in a trusted process in which many SMEs are still wary of what a FinTech can really offer them. However, as SMEs evolve into the digital age and become more agile, and as FinTechs prove they can operate in the right way, it will translate into greater mutual trust.

An important point of this trust is the so-called FinTech Law, which is extremely relevant because it legitimizes these companies and lays a foundation with clear rules to be able to understand that the money that SMEs put in or take out is from regulated and safe institutions. “This whole scenario helps to understand why, more than ever, both FinTech and SMEs will work hand in hand. It remains to be seen how both sectors will emerge from the economic crisis we are experiencing because of the pandemic.” concludes Simon.