The interest in developing and investing in Financial Technology (Fintech) essentially rose out of the ashes of the 2008 global financial crisis, when trust in traditional banking plummeted to an all time low. This period, where almost everyone but the bankers suffered, prompted businesses and individuals to seek a more transparent, efficient, and secure method for handling their financial activities. The Fintech revolution as it is now known, fueled by technological progress and evolving consumer expectations, has transformed the financial services industry and seen the introduction of groundbreaking tools like our very own Pulse. 

Going forward, we will touch on what Fintech tools actually are, and how they have impacted every sector of every UK industry. Later we will start to understand how Fintechs are benefiting businesses, from decision making to customer relations, and then take a look at some of the acknowledged advancements that are seeing fintech continue to grow and become more accessible. 

Understanding Financial Technology Tools 

Fintech encompasses a vast and diverse range of applications, and is more of an umbrella term that includes any form of financial management software. Anywhere from digital payment platforms such as the familiar PayPal, to personal finance apps like Mint, as well as blockchain and cryptocurrencies, where platforms like Ethereum do not just function for a cryptocurrency, but rather an ecosystem that works to develop decentralised applications.  

The reach of fintech is vast, so for the purpose of relevance, today we will focus primarily on the power of financial data analytics for businesses, as well as accounting, and how tools like Pulse are benefiting SMEs the most. 

Open Accounting, combined with Open Banking software and cloud accounting tools have become indispensable for entrepreneurs looking to improve their budgeting and business strategies. Our revolutionary tool, Pulse, takes these fintechs a step further, and by integrating with both banking and accounting platforms, is capable of offering small business financial insights, as well as forecasts of their key financial metrics to support decision making. 

The Impact of Fintech on Business Operations 

When the concept of Open Accounting and Open Banking started to show prominence in the finance sector, there was an understandably large amount of scepticism about their capabilities, as well as an uneasiness over the thought of sensitive financial data being offered up to third parties to achieve the benefits that these fintech tools were promising. For businesses, it would not take long to start reaping the benefits. Routine financial tasks like invoicing and payroll – otherwise tiresome and at risk of human error – could be automated, relationships with accountants and other finance professionals became more transparent and open, and entrepreneurs could envision their brand’s health like never before. Today, with the right fintech tools, businesses are saving time, their numbers are more accurate, and they better understand where to correctly invest or allocate resources to spur growth. 

Pulse can offer the perfect example to illustrate how entrepreneurs are benefiting from fintech tools. Just one of our platform’s capabilities is to display how an enterprise’s gross margin changes over time, and we do this through our intuitive dashboard which can be accessed by both business owners and their financial advisors. By presenting financial data in easy to understand formats like bar graphs and line charts, users are presented with an accurate and graspable depiction of their business’s performance numbers. Our service assists in recognising patterns in profitability, such as spotting peak efficiency periods. At the opposite end of the spectrum it would also be possible to detect where expenses are rising faster than revenue. This up to the minute evaluation plays a role in guiding decisions, whether it is for pricing, procurement, or sales tactics to boost overall profitability, taking us neatly to our next point. 

Enhancing Decision Making with Fintech 

We will look closer at the implications later, but for fintech, the continued development of Machine Learning (ML) alongside Artificial Intelligence (AI) has helped to fundamentally transform how businesses can approach their strategy development and decision making. AI powered analytics and real-time financial data are the cornerstone of this progression, allowing users to receive frequent dashboard updates regarding their business’s key financial metrics with up to the minute numbers. You can essentially maintain a complete view of your enterprise’s current health, and take hasty action in cases such as a dip in cash flow or unexpected surge in sales. 

The sheer depth of insights business owners can reap through advanced data analytics has meant that they can understand both what is happening with their financial metrics, and more importantly, why it is happening. Entrepreneurs can and should seek the utilisation of fintechs to empower themselves and their business so they can get ahead of their competition, achieving success in areas where their competitors have failed to collect or comprehend the correct data. 

Fintech and Customer Relationships 

Fintech tools for accountants and other finance professionals, be they advisors or lenders, can use the same tools that are so beneficial to business owners, to analyse their clients financial behaviours, and then use those insights to provide tailored advice that is based on demonstrable numbers. Fintech helps develop transparency and trust between accountants and their clients because both can see and understand each other’s actions and perspectives, strengthening relationships and boosting engagement for the benefit of all parties. 

Our own fintech, Pulse, enhances customer relationships by providing a shared platform – our bespoke dashboard – where both service providers and clients can access financial data in real-time. Our accessibility aims to not only foster transparency, but also help to ensure that all parties are on the same page with regards to financial status and any future projections. To top it off, finance professionals can effectively highlight all of the specific insights they think will be most valuable to their clientele. 

Future Trends in Financial Technology 

• AI and Machine Learning: AI and ML continue to automate and enhance fintech all across the umbrella, utilising advanced pattern recognition to forecast financial behaviours and market trends. As the tech advances and it is capable of aggregating information from larger numbers of metrics, the strategic foresight that businesses will be able to glean will take their predictive capabilities far beyond the current. 
• Blockchain Technology: While we touched down on Ethereum, blockchain’s aims to continue increasing transparency and security through financial transactions and facilitate more innovative ways to make payments without the need for intermediaries will ensure the entire financial sector remains secure from potential fraud. 
• Cybersecurity: The reason why security is so important, and why development by platforms like Ethereum is so important, is because as fintech evolves and becomes more complex, so do the efforts to breach security and obtain sensitive financial information. A focus on the development of cybersecurity is a complete necessary, and will aid with the continued protection of vulnerable data. 
• Sustainable Finance Technologies: As global awareness of our shared environmental issues increases, there has been a growing trend recognised between industries towards more sustainable efforts. Fintech innovations are emerging now that are in full support of green bonds and sustainable funding, as well as funding for environmental projects. 
• Expansion of Financial Inclusion: Fintech is set to play a crucial role in enhancing financial inclusion, this is aimed at by providing access to financial services for underserved or unbanked populations, and is truly a global effort. Mobile banking and digital wallets, along with microfinance apps can offer essential services that are accessible remotely via smartphones, making it easier to reach broader communities. 

Parting Thoughts 

Although we have focused primarily on fintech software that offer financial insights to SMEs today, the industry offers a plethora of niche tools that can transform how their users manage finances and make decisions, and as the industry continues to progress with innovations in AI, blockchain and cybersecurity, businesses stand to gain a lot from investing time and energy into them! 

Grow With Pulse Throughout 2024 

Our Software-as-a-Service (SaaS) platform, Pulse, aggregates financial data for SMEs, delivering small business financial intelligence to entrepreneurs seeking valuable insights across numerous business KPIs. Pulse is useful for both business owners and their service providers, and integrates with Open Accounting and Open Banking software with the aim of getting you ahead of the competition. Sign up today, and start utilising our dynamic dashboard as the engine that fuels your business’s expansion in 2024.