Scaling back: How banks, NBFCs post pandemic can help MSMEs achieve growth in new normal

Credit and Finance for MSMEs: The impact of the Coronavirus pandemic has severely disrupted small businesses across the world. A post-Covid-19 official report assesses that more than 200 million SMEs and MSMEs would require customized financing support to help them fund their operations, achieve growth, and generate livelihood. Besides finance, enterprises also require access to novel market opportunities, consumer databases, and advanced technologies that can help them amplify their productivity, efficacy, and agility in the new normal. To sustain their operations in the transformed business environment, companies would also need access to resources that can help them build a resilient infrastructure.

With the rise of innovations in fintech solutions, banks and NBFCs are fast enabling small and medium-sized enterprises to enhance their financial caliber and achieve business expansion. With the Covid-19 pandemic unleashing a considerable number of challenges for small-ticket companies around the country, banking corporations and fintech-driven NBFCs offer sufficient potential for etching a solid recovery process post the economic downslide. There’s an evident need for fintech companies to assist the rebuilding of the national economic engine of which SMEs and MSMEs form the vital backbone by aiding ample collaborations, resource-sharing, and technological optimization to rejuvenate the ailing small business ecosystem.

In wake of the pandemic-induced lockdown and various cultural restrictions, several banks and financial players around the world wasted no time in equipping small businesses with timely support plans. The rampant rise of digital technologies and e-commerce platforms has helped businesses survive the post-pandemic ordeal. By strategically optimizing the vast network of their company resources, tech-innovations, and network partners, financial players are cementing the path to a resurgence for innumerous SMEs globally. The digitations of work processes and operation modules have also catalyzed online training modules for small-business owners through e-forums to step up businesses in these changing times. The online training and mentorship programs can include various segments such as crisis management, financial planning, and marketing communications to streamline company operations in the new normal.

A number of fintech entities are also leveraging the digital omni-channels and virtual interfaces to showcase the products and services of various SMEs and local businesses before global audiences to initiate novel market prospects, greater sales-generation, and collaborative ventures. Banks and NBFCs can also empower the SME and MSME ecosystem towards extensive content generation, logistics and supply chain operations, delivery processes, and zero-cost online legal services. Through dedicated e-training programs that are amalgamated with in-person virtual workshops to extend practical coaching to countless small entrepreneurs, banks and NBFCs are aiding businesses to achieve greater customer. By focusing on cash flow revival, community-building, and maintaining a sense of calm; Banks and NBFCs are also helping small businesses rebuild a robust and vibrant SME ecosystem.

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Furthermore, a number of fintech companies are also deploying state of the art tech-innovations to cover the enormous credit gap that is typical to a developing nation such as ours. Due to various factors such as lack of collateral, ambiguous credit histories, absence of back records, a number of small and micro-entrepreneurs are unable to access financial services and product suites. They are fast enabling better navigation strategies for SMEs and MSMEs in these evolving times by augmenting their digital presence for greater adaptability.

The recent emergence of advanced technologies like data analytics and machine language offers ample potential for financial deployment. A number of banks and NBFCs these days optimize cutting edge insights and data feeds generated from sophisticated data analytics and other data sciences. These can also prove instrumental in helping financial entities improve their loan records through higher credit transactions riding on the back of dependable data.

While the focus on collaterals to defer the adverse impact on already unstable loan books is self-explanatory, financial organizations like banks and payment companies must increase the use of technology in improving the loan application processes and provide easy and seamless payment and repayment options through various digital pathways.

The role of banks and NBFCs in powering small businesses in the post-pandemic new world order goes way beyond routine financing. The rise of fintech and overarching digitisation is redefining the part assayed by finance companies in uplifting SMEs. They have grown into preservers and enablers and are responsible for directing innovation, flexibility, and entrepreneurial growth in the post-pandemic business world.

Sumeet Srivastava is the Founder & CEO of Spocto Solutions. Views expressed are the author’s own.