Fintech drives UK SME growth with tailored solutions, streamlining finances and boosting efficiency.
Small and medium-sized business (SME) owners are the driving force that sustains the British economy. At 5.51 million strong, SMEs account for approximately 99% of the UK business landscape. Their impact is undeniable, having driven two-thirds of job creation in the past 25 years. However, SMEs face numerous challenges, such as talent shortages, high operational costs and evolving technology demands, meaning many are eager to explore new tools and strategies, including those offered by fintech, to help them overcome these hurdles and fuel their expansion.
The embedded finance sector is projected to be pivotal for SMEs. Accenture forecasts that embedded finance solutions could capture up to a quarter of the global SME banking market by 2025, reaching an estimated value of US$124 billion. These findings suggest that fintech solutions are positioned to address key obstacles for SMEs, bolstering their efforts toward growth and stability in an increasingly dynamic market.
Given all of this, we will focus on how fintech is evolving rapidly and is poised to help businesses navigate key challenges – especially when it comes to financial management – thereby underlining the importance of financial solutions specifically tailored to meet the needs of SMEs.
Fintech companies can construct fast-track lanes for SMEs. This involves utilising technologies many have developed in-house and forging
partnerships that lead to the creation of financial ecosystems. Such arrangements facilitate process automation and integrations that benefit businesses in their simplicity.
The rise of all-in-one service platforms has transformed the landscape, where businesses only have to deal with one financial service provider to access everything they need from a payments perspective. Fintechs now offer SMEs streamlined, comprehensive solutions under a single contract, simplifying operations and providing clear, transparent pricing. These platforms also enhance decision-making by offering integrated, real-time monitoring, allowing businesses to track their finances more efficiently.
Businesses need scalable solutions to grow, be it product diversification, market expansion, enhancing digital presence or even entering e-commerce. Rather than offering a one-size-fits-all solution, fintech platforms provide scalability, enabling businesses to add features aligned to their growth.
For instance, they can swiftly open accounts in different currencies, integrate payment gateway systems directly into their new e-commerce websites, or acquire point-of-sale systems for physical shops to accept payments directly to their account without needing additional providers.
Over half (54%) of UK SMEs experience problems related to late payments, with an estimated £23.4 billion in overdue invoices owed to them. Indeed, businesses spend about 3.6 hours a week manually reconciling payments.
This is just one of the challenges that can be alleviated with a fintech business account integrated with invoicing software. Businesses can collect payments directly into their accounts by embedding payment links directly into invoices. Online invoices with payment links tend to be paid up to twice as fast as those without, enabling faster payments and smoother cash flow management.
UK Export Finance notes a significant uptick in SMEs entering international markets, with a 30% increase in the use of export support services last year. Fintech emerges as a powerful ally in this international push. For example, multicurrency accounts can be opened online in minutes, enabling SMEs to manage finances in multiple currencies and conduct cost-effective international transactions. This, combined with the generally lower fees offered by fintechs, empowers SMEs by streamlining operations, reducing overall expenses and propelling their international ambitions.
Global losses from payment card fraud are projected to reach $400 billion over the next ten years, with authorised push payment fraud alone expected to grow at 11% from 2023 to 2027. With regulatory authorities driving stringent anti-money laundering laws and regulations, keeping transactions safe in digital premises has never been more urgent. This is especially critical for businesses where brand reputation is also at stake.
With advanced security measures in payment technology like real-time transaction monitoring and multi-factor authentication to detect and protect users against fraud, these platforms also use various channels to engage with users, offering interactive and engaging educational materials to enhance SMEs’ awareness and understanding of fraud prevention techniques.
As SMEs evolve, their needs will also grow in complexity, driving the demand for even more innovative, flexible and secure financial solutions. Fintech solutions are uniquely positioned to meet these demands, bridging gaps that traditional banks may struggle to address and empowering SMEs to thrive in a dynamic economic landscape.
Fintech companies must further focus on creating a seamless and adaptable ecosystem, enabling SMEs to navigate global markets, manage cash flow efficiently and access cost-effective solutions tailored to their individual growth trajectories. Industry collaboration and advances in regulatory frameworks will also play a pivotal role, supporting safe and transparent environments where fintech can flourish without compromising security.
With scalable, collaborative and cutting-edge financial tools, the next generation of fintech will be integral to SMEs’ ongoing success and resilience, ensuring they remain at the heart of the UK’s business landscape.
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