Relationship between fintechs and small businesses involves more and more opportunities



According to the Ministry of Economy, micro businesses and small businesses are together responsible for 30% of Brazil’s GDP, which is also the country with the largest amount of fintechs in Latin America. An extremely favorable scenario for both sides, which nowadays even go hand in hand.

The connection between fintechs and small businesses, first and foremost, involves the increase in technology and in regulation flexibility, which has in turn decreased the bureaucracies and the difficulties within each process, without leaving aside an advancement in data security. The financial transactions in these small businesses started happening in a digital manner and, furthermore, have made it possible to open an account in just a few clicks, making it easier to construct a financially well-structured corporate entity.

In the midst of this, different players in the market can also visualize a strategy for their own growth. Fintechs offer platforms for payments, charges, credit, refills, withdrawals, deposits, and various other possibilities, no longer having the need to involve third parties or large banks.

Open Finance and Pix

The operation of fintechs with Open Finance, and initially with Open Banking, is also a huge facilitator.

The access to different data, as well as customer and company behavior patterns, makes it so the investment into small businesses can become more assertive, bringing more efficiency to many services, products, and digital tools. This also brings more independence to the small entrepreneur, who can resort to fintechs to get services that used to involve less freedom and adaptability to their needs.

As another simplifier of this process, Pix also allowed the financial inclusion of over 50 million people, aside from making processing charges and payments easier.

A New Credit Concept

The greatest convenience when granting credit provided by fintechs is also crucial to the opening and maintenance of small ventures. The capital involved does not have to undergo approval from large banks and financial institutions anymore, which influences the rates, payments, and speed of the overall process. 

On the fintechs’ side, the data regarding the companies which will receive the amounts are researched from sources well beyond a simple transaction history, analyzed through online means and are, therefore, automated. Along with a more practical alinement to LGPD and other necessary regulations.

The automated charges are advantageous for both sides, bringing more speediness for those who pay, and reducing the rate of default for those who charge.

Despite a favorable scenario due to all of the above, the lack of financial education of the Brazilian population is an aspect to be taken into account at all times in the small business universe. Even with faster access to information, mixing personal and professional finances and not following investment strategies are huge cultural barriers for the beginning and maintenance of ventures. A challenge that is also being overcome through fintechs’ initiatives and technology.

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