The Influence of Fintech on Supply Chain Finance
Financial technology (fintech) has closed the gap between suppliers and consumers worldwide. Technology has created a useful digital system that is mutually beneficial. This has improved working capital and reduced or eliminated contract execution costs. The digital system applies to all industries, from healthcare to the banking system worldwide. Fintech studies show that there is increasing investment in the fintech sector. Statistics show that $ 31 billion has been invested over the past three years. The technology is also available for trading platforms. The many eToro reviews found online are evidence of the tremendous impact fintech services have had on stock trading platforms. The digital trading platform plans to merge with several fintech services to improve cryptocurrency trading.
Fintech companies that venture into the supply chain act as brokers for digital procurement. The companies use different banking networks to offer the best trade finance terms. Fintech companies rely on different structures. However, the process starts with the buyer and ends with payment from the supplier. Fintech can use techniques like the broker. For example, the supplier can be paid within 5-10 days and the buyer must pay within 120 days, but still under the same agreement. The buyer is dealing with the fintech company. You will get low processing costs due to the automated system introduced by the Fintech system.
Fintech solutions for financing supply opportunity for buyers
- Best of all, improved working capital through expanded liabilities.
- Lower processing and administration costs.
- Improved financing conditions and optimized procurement process.
For suppliers, they receive payments on time, thereby improving service and product delivery.
Incentive to corporate finance
Since the introduction of fintech and the advantages they offer on different platforms. Most companies (1 in 4) use fintech systems to run their supply chain financial platforms. Before Fintech, the supply chain was financed by banks. All companies were limited to banking options and terms. Today, the supply chain finance platform can use fintech to connect to a network of banks and finance options. The fintech solution offers flexible services such as automated money exchange. Companies can provide more working capital and procurement process to new industries.
Global impact of SMEs
The fintech solution is available for small, medium and large companies. Technology offers equal opportunities to all business areas. Research by international financial firms shows that the most significant growth in fintech (supply chain) comes from SMEs. In the past, financing SMEs has been challenging and required documentation and verification in order to obtain business loans. However, fintech has improved the services and maturity of the loan process. SMEs can increase their production through adequate funding and automated services. SMEs can merge with large banks via fintech platforms and obtain better financing and financial knowledge.
Fintech solutions aren’t just limited to manufacturing or banking. The healthcare industry still underestimates fintech’s ability to improve their services. The majority of hospitals use the primary system to improve their supply chain. A survey by Syft shows that many healthcare facilities (98 percent) believe that supply chain management works for medium-priority investments. However, integrating the fintech solution will save more than $ 11 million annually compared to the substantial cost of the supply chain.
Hospitals should invest in fintech service to get an automated service that lowers administrative costs. The lack of a digital system for hospitals increases costs as more staff are required. Fintech platforms can help automate procurement costs. Fintech platforms also help connect doctors with patients, especially during the current pandemic situation.
The traditional banking system follows certain regulatory protocols based on the government of the region. Fintech faces regulatory problems as every country has its rules – this prevents many companies from investing in Fintech SCF. However, the fintech platforms are working to solve the regulatory problems for all companies.
Companies should implement low-cost technology and improve their business productivity. You should also focus on risk management to contain any potential risks.