New Zealand’s financial services sector is alive with unprecedented disruption that’s changing the business landscape. If that sounds a little dramatic (and exciting), it is.
Driven by a wave of tech finance startups offering endlessly smart solutions, mixed with rapidly emerging technologies such as AI and a hungry consumer appetite for intuitive online services, it’s more a case of what isn’t fintech.
Fintech has been around for a while, and you’re probably already using it – like Xero and PayPal taking the hassle out of paying, receiving and tracking money. Is anyone still using a spreadsheet?!
Fintech is so popular because it’s displacing old ways of doing things with easier – and more productive – solutions. According to Forbes, US$27.4 billion worldwide poured into fintech startups in 2017, up 18% from 2016.
So how are we going in New Zealand? NZ’s FinTech Survey 2017, published by PwC, noted that 15% of global annual turnover in financial services is devoted to fintech, but in New Zealand, that figure sits at just 6%.
Local businesses and consumers are being readied for the digital finance revolution, with the survey also finding that 91% of the financial services respondents expect that they will partner with a fintech in the next three to five years.
The local fintech industry is represented by FinTechNZ, with representatives from the tech and finance industries, entrepreneurs, venture capitalists, banks and government. Everyone is in – and for good reason.
It’s all pointing to the rapid adoption of a new norm, where people expect to be able to manage all their business – and their finances – online.
And it’s not just about managing money, but sourcing and securing funds. Fintech’s alternative banking options are making it easier for anyone with a good idea and a sound starting point to grow much faster than with the constraints of traditional lending.
How fintech is changing the landscape for small businesses
Here are some of the main ways fintech is helping Kiwi businesses grow.
1. Cloud accounting
Cloud-based software like Xero has quickly become the norm for SMEs, accountants and advisors.
Log on anytime and see exactly what’s going on in your business. And when you need a cash injection for a growth spurt, it’s easier to show lenders or investors what’s happening within your accounts.
2. Global payments
It used to be a pain to accept payments from someone in another country, but thanks to services like PayPal small businesses can sell worldwide with fewer hassles and a much bigger market.
3. Easier and faster access to money
It’s not uncommon for business owners here in New Zealand to borrow from family and friends to avoid the often-arduous process of traditional loan applications via the banks. As a result, the lines between personal and business finance can often become blurred.
Traditional lenders also usually look for security to borrow against, along with years’ worth of financial data, which of course you may not have from the early days.
We understand that small businesses need finance to run and have made accessing money far easier with funding available in 24 hours.
4. Online lending for small businesses
Prospa shares the principles that Kiwis value in their banks – such as building personal relationships, clear vision and honesty – and applied them to products and services that the small business community has told us they need. And we’ve done this all online so our customers can spend less time on paperwork and more time working on their business.
Prospa has funded over $540m (AUD$500m) in loans and helped over 12,000 small business owners. Find out how your business could thrive with a cash flow boost from Prospa.