Partnerships between fintech start-ups and conventional banks can advance the financial inclusion small to medium-sized enterprises (SMEs) need for sustainable economic and social development.
With the spotlight on the role of SMEs in the South African economy, there are many products and services, which collaborations between fintech and incumbent banks can bring to the sector. “Fintech start-ups are offering solutions to many of the problems faced by small businesses, such as cash flow concerns and insufficient funding,” says Daniel Goldberg, co-founder of Bridgement.
According to Goldberg “While some SMEs are hesitant to make the shift towards digital, the reality is that they no longer have a choice. By partnering with fintech start-ups, banks can expand their client services to better serve small businesses. “Partnerships can deliver better, cheaper, faster and more innovative solutions for customers.”
Banks can leverage the strengths of digital innovation. Fintech has created new business models, applications and processes including peer-to-peer marketplaces, online lending, proactive financial alerts, and Robo-investing. Using the latest technology, banks and fintech can work together to develop real-time, multi-channel capabilities that are highly personalized, contextual and more affordable.
In turn, banks can offer fintech start-ups insight into the regulatory environment and access to a significant client base with whom the bank has developed relationships. Innovative thinking and cutting-edge technology combined with established customer bases and distribution networks produce a mutually beneficial relationship for banks and fintech.
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