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Solving the challenges faced by Women SME banking customers with Data

The more money you have, the more you can earn. But it can have an inverse effect if you don’t have it. This holds true for data as well. Vast amounts of information improve banks’ ability to support customers, but financial institutions must know how to use it.

WSME customer are in serious need of guidance from banks, whether it’s about spending, saving, borrowing, planning or all of the above. Most WSME’s struggle with their finances.

In addition, their loyalty shifts easily, considering that digibanks are more accessible with instantaneous onboarding processes. Modern banks are challenged to familiarize themselves with their customers, dig deeper into the reasoning behind their financial decisions and enhance their knowledge of finance.

Not knowing which data is most valuable and how to understand WSME customer needs, broad approaches and profiles leave customers excluded from adequate financial support and the same financial position, maybe even worse.

For WSMEs to share their data with you, they first need to understand the real benefit of doing so.

Modern banks can use data and build trust to improve WSME financial health.

Obstacles for today’s banks

Banks must recognize that historical financial information and elements of those categorized as “the norm” are a general representation of the WSME market opportunity.

For example, a WSME wants to expand her product line with a new product. The product is a little more than she can afford. However, algorithms can tell a bank that others WSME’s bought this new or similar products, and a banks system can offer a line of credit or purchase order financing for this client. However, what happens if the WSME loses revenue due to the pandemic? What if she can’t make her payments?

PO Financing can be a convenient way to make purchases with attractive interest rates, but in case of an unexpected problem, the WSME might resort to making payments with a credit card. This would extend the life of that PO Financing debt while adding additional interest on top. Even if she finds new income streams, she might have put herself through more financial stress.

If a bank adopts a 365degree view of the client which Alternative Credit Scoring can provide via fintech for banks, information from their customers’ accounts to inform you where they and how much they buy, how much they spend on certain products, whether they have a car and insights into their family and education. However, staying on top of the latest data protection regulations means you have to constantly morph operations.

Modern banks need to ensure that they are compliant with privacy and security regulations to make their data safe. With comprehensive data rights legislation, banks must strictly use data for reasons agreed upon with the owner’s consent. They need to ensure customers understand how their bank uses their information with third parties.

There are some steps banks can take to mitigate the challenges with data.

Data to determine financial aptitude

It’s essential that banks create solid indicators to identify each WSME’s strengths and weaknesses . By looking at the WSME’s transactional data, spending habits and behaviors, banks can acknowledge recurring patterns and better align their products.

No matter the financial status of a WSME, if they can pay all their loans and bills at the right time, they’re an ideal candidate for a financial institution. Banks can offer digestible loans that benefit the bank and the customer instead of initiating high-interest rates and everlasting debt victims.

In cases of low credit scores or no transactional data, innovative businesses find ways to understand their customers’ financial strengths.

For instance, machine learning can assess a users’ financial and business aptitude levels based on analysis and system responses. Over time and as the WSME provides more data; the time it takes to get a 365 degree view of the WSME depends on the analysis of the data inclusive of supplemental questioning. After a few days or weeks, responses start to balance out, and banks can provide suitably manageable loans to their customers.