Imagine an entrepreneur making a business plan, but not having the funds to start it. This is the scenario that one faces when they are on a small scale. The situation gets worse when it comes to expansion and hiring, as there is no bank backing them. As a result, even if you have a good business plan, you will not be able to grow beyond a certain extent because there is no one ready to lend money for your business without collateral. In such scenarios, support from traditional banking services seems like a difficult task.
According to the government of India’s Udyam portal, more than 1.2 crore micro, small, and medium enterprises (MSMEs) are registered. SME Neobank has stepped up and is coming up with services that have been gaining popularity among these small businesses across India. Here are some reasons why Neobanking is gaining traction among SMEs.
Convenience is what Neobanks offer to SMEs that traditional banks have often failed to provide. There is a tedious process that an SME has to undergo, from opening an account with the traditional bank to availing credit. These procedures are filled with paperwork and are often lengthy and time-consuming. On the other hand, the Neobanks have cut down these processes that take days into a few minutes with the support of technology.
Even though traditional banks have tried their best to enhance customer experience, their old systems and outdated technologies are pulling them down from providing a good experience for the customers. Neobanks are known for their fresh approach with the intense usage of futuristic technologies that are aimed to create a good customer experience and makes every service available at the beck and call of SME owners with round-the-clock customer support. As a result of an account in any SME Neobank, the SMEs can monitor their financial transactions and can track their money in real-time, thereby increasing their productivity.
In spite of the fact that SMEs account for 30% of the Indian economy, they are unable to obtain credit from traditional banks. These small businesses may have several needs and lack adequate finance. But with SME Neobank at their side, these businesses can easily access the credit they need. They provide several credit options, including term loans, working capital credit lines, and more, that can help businesses finance cash flow and plan for growth. Likewise, SME Neobank offers flexible repayment options that can be tailored according to the business’s needs, with no collateral or guarantee needed.
There are several costs that a traditional bank has to bear mainly due to its physical presence and the resources required to function at various physical locations. These costs add up to the cost of banking for traditional banks. On the other hand, these costs are not incurred by SME Neobanks as they operate digitally. Thus, SMEs need not have to pay these extra charges to any Neobanks, which makes them cost-effective.
Except for giant corporations with a mammoth volume of transactions, there is little scope for SMEs to get customised services from traditional banks. But with help of data analysis, the SME Neobank provides businesses with tailor-made services that they need the most at a particular point in time.
SMEs are the backbone of India’s economy which is expected to reach $1 trillion by 2027. Despite SMEs being a significant part of the country’s growth, access to finance has been a thorn in their side for years. However, with the emergence of new-age SME Neobanks like ZikZuk, that story may very well change.