Small Fintechs Can Have An Advantage

by Raymond Pucci 0

Smaller can be better, at least for some fintechs that can out-maneuver enterprise scale companies. As the following article describes, small businesses are often in the vanguard of innovative products and services within the financial payments and technology arena.

Small and midsize businesses face unique challenges that many of their larger brethren can readily overcome. Enterprise-level companies benefit from innumerable resources and deep pockets, while small companies must constantly discover solutions that help them maintain a competitive edge with lower overheads. As such, it is unsurprising that many financial technology, or fintech, innovations are rapidly adopted by startups and other small businesses long before acquiring mainstream recognition.

Even so, finding the right fintech solutions requires a blend of reading tea leaves and understanding broader technological trends. To stay competitive, small businesses must keep their ear to the ground and uncover solutions that will improve their services, optimize their processes, and keep them lean enough to generate profits.

Whereas traditional credit card processors and PayPal were once the exclusive channels for companies seeking to handle digital payments, new entrants are quickly challenging their more established peers in the industry. Companies such as Stripe and Payoneer have thrown their hats into the ring, offering lower fees, fully digital solutions and more efficient processing times.

While many consumers still use credit cards, offering alternative payments that remove this middleman can result in better prices for end users. Additionally, it can open up SMBs to a broader audience that may not have access to traditional payment methods, or those that prefer to work entirely through digital payments and e-wallets. More people are shopping online than ever before, with digital purchases across a wide swath of industries expanding rapidly. By adopting these payment solutions early, companies can position themselves for long-term success.

Often, small business owners and managers are closer to their customers and understand their pains and gains better than a corporate CEO. Some small fintechs may hit it big by marketing a solution to a problem that occurred within their own organization. Small businesses are their own best testing grounds for a new payment service or e-commerce platform that can prove to be a winner to other companies in need. Then, large companies buy the small companies, new entrepreneurs appear, and the cycle continues.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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