Key take-aways from FinTech events 2022

Unity in diversity is seen in every aspect of our country. From celebrating vivid festivals to holding varied beliefs and value systems, which bring people together. Such is the case too when it comes to the dynamic business landscape of India. We have a diverse mix of 7.9 million MSMEs, 1.48 million registered companies and 500+ large companies by market cap, all united for growth and resilient to remain buoyant in the times to come.

A farmer in Maharashtra is trying his best to get the quality yield and ensure his supply will be able to meet the growing consumption demand of Tier 1 and Tier 2 metro cities and a retailer working on the main streets of the city is trying hard to push the stocks out and replenish them with his inventory management system. While all these operations are happening in various parts, they are all taking place with limited education, limited digital infrastructure, changing climatic conditions and strong need to adhere to changing compliance and governance norms.

Large corporates or anchors as we call them, can take on greater risks, establish and practice compliance and adhere to governance with domain experts but, it is rather difficult for MSMEs (in this case vendors and dealers) to engage in large scale day-to-day operations. This is where a lot of fintechs and financial institutions today, are coming together to solve the problems. There is an opportunity to improve the quality of life of small businesses and entrepreneurs who have dwelled on legacy systems for several decades. Lending and Trade Financing come to the forefront of all this action, where the ecosystem is being pushed and driven to innovate and experiment to deliver on ease of doing business across sectors.

Here are the key learnings that emerged from a recent fintech event, where many fintech players and financial institutions came together under one roof to share best practices

1. Meeting the demands of now, with embedded financing programs

Em-Fi allows non-financial entities to integrate financial services via secure APIs to enable completing transactions without hampering the user experience. On the B2C front, Buy Now Pay Later (BNPL) is one such example that is enjoying the spotlight since couple of years. It enables consumers to buy what they want, when they want from e-commerce websites, with the option to pay later. B2B finance too, operates on a same principle where, large corporates can purchase the good from smaller vendors and agree to pay later once the stock is sold by the retailers on the other side. 47% of the businesses have the issue of delayed payments. This is due to disconnected ERP & Bank Account, cumbersome reconciliation, and technological limitations. Vayana’s cashflow platform collects payments in a jiffy through Digital Payment Rails, enables 360° view of business cashflows and automates 100% reconciliation, bringing efficiency up by 40%.

2. Making technology increasingly invisible to change behaviour

With decades of doing business in a way where one enjoys a loyal customer base, the need to innovate may not take precedence. Such is the case for age-old MSME owners who have failed to bring new customers into the pipeline and lose existing ones. While most technology solutions aim for providing new-age tech solutions to small businesses, promising easy operations, there is very little change in behavior to adopt new-age solutions. Reasons being lack of infrastructure and skilled labour. Over 75% of small businesses want easy financing options versus digitization of existing processes. MSMEs continue to be the most underserved business segment today due to lack of access to trade credit, high customer acquisition cost and poor technical know-how. Vayana’s supply chain finance is designed to put more money in the hands of every business in the supply chain. With curated financing solutions for every tier of supply chain, it lowers the costs to deliver affordable financing.

3. Driving credit readiness with governance and compliance

Imagine following up with large customers for accounts receivables with multiple calls, WhatsApp chats and emails. Then running to the factory to monitor the material and checking output for QC. Then sitting down with legal attorney to get licensing and patents going for the business. On one side the large corporates must be very careful in selecting the vendors and dealers when it comes to adhering to the changing norms and on the other hand, those dealers and vendors are soaked into driving volumes and quality output to keep the supply chains running. Amidst all of this, small businesses often outsource compliance and governance to part time CA. There is a strong need for products and solutions to enable credit readiness for such business. To drive scale and be infallible in business operations, platforms created by Vayana enable integrated compliance and reconciliation. Today, Vayana GSP is powering over 4 billion API calls, fraud-proofing trade finance with e-way bill and e-Invoice validation and also digitizing procure to pay by compliance embedded in invoice management. Large corporates can now choose vendors having Vayana’s Good Business Score to keep their supply chains flowing.

4. Adopting smart ways of assessing risk through new-age data

Clive Humby a British mathematician in 2006 said, “Data is the new oil”. It’s been close to two decades and it holds true even today. But, when it comes to supply chain financing with millions of transactions been processed across sectors and tools, how do we bring sense to the volume of data flowing through the pipeline? Here’s where a smart data practice plays a critical role. With so many small businesses, our ecosystem is flooded with unstructured data. This is also termed as surrogate data. For large corporates to do business and accelerate their supply chains, it is important to acknowledge that surrogate data like utility bills, social media accounts, cheque bounces are key performance indicators for large corporates to gauge the risk of onboarding them as vendors and dealers. New-age data science start-ups play a vital role in distilling such data that enable large corporates to make informed decisions in choosing their supply chain partners.

5. Making money available to the smallest of businesses

This essentially means that people should be able to access financial services without any hindrance. FI index tracks whether the government can deliver financial products equally amongst the population and how usable those products are. With more and more women working from home, becoming entrepreneurs the need to be self-reliant and be financially fit has been higher than ever before. From kirana stores to manufacturing units’ shopfloors, women are increasingly doubling up to bring in more income into the households. Some out of passion, some out of the need to recover. Small business owners on the other hand are expanding units to generate income from other sources. Extending finance to the last mile – both in terms of geography and size of business, will play a vital role in shaping the country’s output.

The onus lies on governing bodies and financial institutions to supplement their efforts and make finance easily accessible to deserving sections of the society. Here’s where Vayana’s commerce, cashflow, credit and compliance platforms play an instrumental role in driving modern supply chain finance across businesses.