Are Canada’s Small Businesses Ready for Fintech Solutions?
Insight FinTech can play a transformative role in a small business — but how can entrepreneurs ensure these new solutions work best for their enterprise?
Fintech can be transformative for a small business but there are important points to consider. Dan Kelly, President and CEO of the Canadian Federation of Independent Business (CFIB), shares his thoughts on how entrepreneurs can ensure these technologies work best for their enterprises.
Mediaplanet: What are some challenges for small businesses adopting fintech?
Dan Kelly: The biggest obstacle for small firms in adopting new approaches is affordability. They have already been hit hard by high credit card processing fees on top of confusing statements and hidden charges. Many of the new online lenders may speed up decisions, but charge usurious rates. Small to medium enterprises (SME) want to have secure options that they can trust, but they don’t want to lose their shirts. If the cost of adoption is too high compared to using banks or accepting cheques, cash, and debit, they will be hesitant to make that investment.
What are the advantages of adopting fintech for small businesses?
Small businesses need to be nimble. They often don’t have HR, payroll, or accounts payable departments — and all those roles may fall on the shoulders of the owner. Fintech solutions have the potential to make that easier for them by automating processes and digitizing their record-keeping. Online lenders may be able to make quicker decisions using a more varied range of data points on the business. Consumers are also demanding more choices in payment platforms, whether it’s online or at the cash register, but these platforms need to be designed with the realities and needs of small business owners in mind.
What are your recommendations for the fintech industry if it wants to appeal to small businesses?
My advice to the fintech industry is to build trust and to listen carefully to the needs and concerns of small businesses. Unfortunately, while there are some cool new fintechs out there, many are building on the same expensive payments and banking infrastructure as everyone else. We need some breakthrough technologies that allow new approaches to compete head-on with what we already have. With the advances of ISO 20022, I’m hoping we will see some new, low-cost B2B invoicing and payment options just as we did decades ago with Interac in the B2C space.
How can the government help bridge the gap between fintech players and small businesses?
Government has an important role to play in ensuring that new approaches are secure and that there is a level playing field between incumbents like the banks and new, emerging fintech players. We also want to ensure banks and others don’t withdraw important and trusted lower-cost options like cheques until the market has equally strong new tools for SMEs to use. Finally, the government can also help create a fair and transparent dispute resolution process to ensure the integrity of the system.