In the 1800s, scientist Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.” Today, those words have never been truer. In the beginning of 2020, we’ve started hearing words like social distancing, quarantine, lockdown, work-from-home, new normal, and digital transformation and acceleration at the very least. As COVID-19 pandemic stretches on, many multinational companies have started to adapt and use all the resources they have to create a new way to operate. To the abled ones, they managed to work-from-home, but for a lot of SMEs, they were left with no choice. That kind of disruption today is not how we used to think of “disruptions”. Especially in businesses, the likes of Uber’s transportation disruption, Airbnb’s emergence in hotels and b&b’s, and even TikTok’s surge in social media among many others; all positive disruptions to our normal. But today, the disruption in our lives, of businesses can’t entirely be positive especially when your small business is barely surviving.
During these extraordinary times and with an uncertain road ahead of us, we remain hopeful. Because these are the times when technology works best, proves its worth and becomes an enabler of businesses. When people were forced to stay at home, they made a way to be entertained and SMEs saw a potential, maximizing food delivery services while others suffered. Others found innovative ways to continue sales and was introduced to online selling. While we say adaptability to change is most critical, many just don’t have the capability. Great things that keep us going. But we cannot just always be reacting to change, we need to be ready to make a change. Because what we’ve known as normal is no longer working, we will need to provide SMEs with an alternative financial system to equip their businesses today and help them survive tomorrow. Preceding a pandemic, we will now see more and more businesses going cashless and it will be more prevalent in many developing countries. SMEs will learn to sell online and make use of technology available. Fast forward to 2030, we will see more digitally driven governments and the rise of digital banks. More sophisticated technology will become more accessible to the market. We will no longer have to present cash, cards or mobile devices. We will pay just by presenting ourselves, our physical selves will be the mechanism that triggers a payment at a merchant or Online. The means which we transact will be the payment mechanism. For example, at the Amazon in the US we pay by walking through a phone NFC reader. We don’t have to take the phone out, it pays by NFC.
In 1999, Kiu Global Founder Steve Landman was involved with a company called Pay-by-Touch which allowed a person to pay by touching his thumb on a thumb print reader and voila the transaction was complete. Now we have QR codes and OTPs… but in the future it will be embedded chips or retina and/or facial or voice scans that will initiate the payment processes. All Know-Your-Customer will be done electronically, document verification for individuals, corporate registrations as well as any tax verification will be done seamlessly and via automated artificial intelligence. Our digital identities will be how we transact. Lending to SMEs will be automated…such as what Kiu Global is doing already. Data entered into an accounting or ERP system will be extracted automatically when an SME wants to apply for a loan or credit. By pushing a button online - the loan origination process will start whereby all the relevant loan application data will be pulled out of other integrated systems. eKYC will confirm the identity of the director and company, documents will be collated and approved by a machine which in turn will initiate an automated credit score and if rejected a chat bot will send a message to the entity of the issue with their loan application for correction or if accepted the funds will be disbursed. Banking interaction will be almost 100% done through technology. AI and conversational banking will become the norm. We will interact with our banks via machine using voice and text. We will be able to complete transactions like transfers, payments and other banking services using our devices without the assistance of a human limiting the need to open physical banks. Security and data storage will become of paramount importance.
Most processing of data will move from the cloud to the edge, the cloud will be only for data storage. With millions of processors at the edge, in mobile devices, home appliances, automobiles and other (IoT) devices; processing will move back to the edge and transactions, computing and approvals will happen much faster- almost in Nano seconds. Security will be the most important component. Security will be done in quantum ledger. Similar to blockchain, Quantum Ledger is a fully managed ledger database that provides a transparent, immutable, and cryptographically verifiable transaction log owned by a central trusted authority. Quantum Ledgers can BEYOND FINANCE 19 be used to track each and every application data change and maintains a complete and verifiable history of changes over time. Over the last decade, we’ve seen incredible progress in SME finance, however the development has been much slower than one would expect.
M-Pesa was one of the first fintech’s that became well known and their success was indisputable; nonetheless, the rest of the world has been slow to adopt technology for finance. But now, we are seeing great transformation and we see SME Finance including in the transformation. With the help of companies like Kiu Global which sole focus is access to finance for the SMEs in Asia. Kiu offers a platform to SMEs for accounting and loan automation that allow the SMEs to get credit and loans based on alternative data. Kiu is operating in (6) countries across Asia and is impacting over 40,000 SMEs and the lives of millions of people in Asia.
This article was selected and first published in the SME Finance Forum: Call for Insights E-publication: Crowdsourcing the Future of SME Financing.