Recent innovations in fintech are empowering startups and small and medium-sized enterprises to build better, more agile workflows that save time and money and enable them to focus on innovation and growth. These digital tools are well-suited to smaller businesses as they reduce the burden of numerous financial administrative tasks cost-effectively.

Accounting and payroll is one area where fintech companies have moved quickly to serve SMEs. In the UK, HMRC-recognized online accounting software has transformed the process of issuing invoices, managing payrolls, controlling cash flow, calculating VAT and meeting tax obligations. Rather than having to do each task in basic spreadsheets, the software from providers such as Sage allows businesses to manage everything from a single hub.

One reason why there has been significant innovation in this area recently is that fintech companies now view SMEs as “key targets”, according to Copenhagen FinTech CEO Thomas Krogh Jensen. He adds: “Fintech tools bring significant benefits for small and medium-sized companies.” Previously unserved by big banks and other financial services that focused on mega-corporations, SMEs can now use a range of affordable solutions to improve their business.

25% of global SMEs have adopted fintech in some form, according to the 2019 EY Global Fintech Adoption Index, and this figure has likely surged following the pandemic as more companies embraced digital transformation to mitigate risks and take advantage of new revenue-generating opportunities. SMEs that have integrated fintech tools are reaping the benefits right now, but are in a position to take advantage of new tech such as artificial intelligence.

Plug-and-play payments have also reduced the complexity of completing sales for smaller businesses in recent years. Accepting payments used to be quite challenging due to the technical systems and payment methods required, but fintech innovations have streamlined the whole process and made it easier for SMEs to complete transactions in what is now an increasingly cashless society.

Banking is another area that was often expensive and time-consuming for smaller enterprises. This is because opening a business account with one of the traditional financial institutions was challenging and the service was often not tailored for the needs of startups. In contrast, digital banks now readily serve SMEs, offering them the financial support they need to conduct business on a day-to-day basis with ease.

Fintech innovations centred on data analytics, business management, financing and liquidity, and compliance and cyber security are also enabling SMEs to build thriving ecosystems during the formative years of business, rather than having to stumble through with an outdated, expensive legacy infrastructure that is not capable of driving long-term growth.

Fintech experts believe that there is still vast potential for further innovations that serve SMEs, with the focus on technology that will create and automate workflows so that companies can focus on delivering higher-quality products and services to their customers. One area of interest is climate change and ESG due to increasingly strict compliance. Whatever is in store, SMEs will be the first in line to benefit.