How Fintech Is Helping Businesses Mitigate Financial Burdens
No matter the industry and regardless of the particular product or service you offer, business has always been a numbers game. To survive, your company must take in more than it puts out.
It must, in the aggregate, be profitable enough for long enough to absorb market shocks and ensure its capacity to meet and evolve with consumer demand. That means that you not only have to excel in your particular market niche, but you also have to thrive in the domain of financial management.
In an era of ongoing global economic uncertainty, where the impacts of the COVID-19 pandemic and the lockdowns it engendered are still felt, such financial acuity is not easy. The good news, however, is that entrepreneurs do not have to oversee their company’s finances on their own.
Indeed, innovations in financial technology (fintech) are equipping entrepreneurs with more and better tools than ever before to optimize their business’s financial processes. This article examines the role of fintech in helping companies of all shapes and sizes mitigate their financial burdens.
Enhancing Financial Data Analytics
Perhaps the greatest benefit of fintech is its capacity to enable business leaders to acquire accurate, comprehensive, and timely data on all aspects of business performance. Fintech software powered by artificial intelligence (AI), for instance, can provide continuous monitoring of both internal conditions and the external market environment.
This allows decision-makers to access relevant data in real time before making a business decision, formatting an operating strategy, or responding to an existing or potential crisis. These analytics help leaders pinpoint underperforming areas within an organization, identify inefficient spending patterns, and predict market trends.
The result is a more informed approach to business leadership based neither on intuition nor on stale and therefore irrelevant data, but on current, reliable, and relevant facts. This enables leadership to take an evidence-based approach across all business functions, from product development to outsourcing and everything in between.
Visualizing Financial Data
Keen financial data analytics are fundamental to effective business decision-making. However, analytics are only effective if used well. This is yet another arena in which the significant benefits of fintech shine through.
Innovations in fintech do not simply enable financial data to be collected and analyzed, they also facilitate the visualization of this data. The capacity to visualize financial data is paramount if you want not just to gather the data but to understand and communicate what this information means in simpler terms.
Financial automation tools can collate data gathered from invoices, balance sheets, and other sources and use them to generate detailed and highly comprehensible infographics. This means that decision-makers do not have to wade through page after page of hard numbers to try to glean the significance of the data.
Their meaning will be clearly and immediately visible in the pie charts or bar graphs automatically generated by the fintech analytics tool. This means that you will be able to make evidence-based decisions based on the financial health of your company and/or your market.
But, just as importantly, it also means that you will be able to make those decisions more rapidly and communicate more effectively than is possible without visualization. Additionally, as any good business leader knows, if you want your team to be productive, efficient, and engaged, communication is key. Financial data visualization provides you with the tools you need to support and communicate your decisions to your team in meaningful ways.
Increasing Market Reach
In addition to supporting more effective decision-making and strategy development through enhanced financial analytics, fintech also helps expand companies’ market reach. Through the emergence of digital financial transactions, people without access to a physical banking institution can still complete financial transactions. These transactions may range from peer-to-peer lending to the use of digital currencies for the purchase of big-ticket items, such as properties or automobiles.
Thus, the digitalization of the global financial system helped to incorporate previously disenfranchised persons, providing market access to the previously “unbanked.” This has been a tremendous benefit for both these once-marginalized consumers and the enterprises that now serve them.
Digital financial transactions have helped to truly globalize companies’ market base and, in the process, have served to diversify their revenues. For businesses seeking to survive and thrive in these times of profound economic uncertainty, the ability to tap into diverse markets and cultivate multiple revenue streams is key.
Enhancing Global Transactions
As has been seen, the digitalization of finance has helped to increase market globalization. More people in more areas now have access to the marketplace than ever before. This means that businesses have access to a far larger and more diverse customer base than previously.
However, the benefits of fintech do not end with increased market access. Digital financial transactions also make processes of buying, selling, and lending on an international scale far more efficient and cost-effective.
It is far faster, easier, and more secure to make a cross-border payment using digital currency or a virtual credit card than physical money. These transactions are, in general, nearly instantaneous. They are also highly transparent. Transactions conducted in the digital realm can be readily tracked online, as opposed to the immense investments in time, resources, and effort required to follow a traditional financial paper trail.
The Takeaway
Fintech innovations are helping businesses mitigate their financial burdens in a wide variety of ways. Among the most significant of these benefits is the capacity to enhance decision-making through comprehensive, real-time data analytics. In addition, fintech solutions are also increasing business leaders’ ability to visualize financial data through automation. This not only speeds decision-making but also enhances communication and supports employee buy-in. Further, through the ascendancy of digital financial transactions, businesses are better able to reduce their financial burdens by expanding market share and diversifying revenue streams. This leads to a truly globalized marketplace that ends the marginalization of once-disenfranchised consumers while enabling businesses to break free of geographic constraints.
