Small businesses have been hit particularly hard by the pandemic. As a result, a number of solutions have emerged to help small businesses access finance quicker. Payson Johnston is the CEO of Crowdz, an invoice finance platform for SMEs that allows them to access cash flow otherwise caught up in lengthy payment terms.
What has been the traditional company response to fintech innovations nationally?
Our company has always championed small businesses and strived to provide services to them where traditional finance has failed. For any small business, accessing cash flow quickly is their biggest concern. When you add in factors like interest, predatory lending practises by the banks and lengthy payment terms, something that seems incredibly simple becomes incredibly stressful. We’re passionate about changing that.
How has this changed over the past few years?
Covid-19 has seen the emergence of supply chain finance as a service – or SCFaaS – where corporations and other large enterprises are given the opportunity to assist small businesses through invoice financing platforms (like mine) as a CSR opportunity.
What fintech ideas have been implemented?
During the pandemic and following on from the emergence of SCFaaS, we launched our Reclaim the Future project, which uses receivables finance to provide cash flow to small and medium-sized businesses. The initiative is funded by P2P investors and the risk assessment is handled by algorithms, rather than humans, which eliminates the risk of bias. This is particularly beneficial for businesses run by minority communities who have been hit hardest by the pandemic but experience higher barriers to accessing business finance.
What benefits have these brought?
When it comes to minority groups accessing finance, often, these issues stem from human bias. By contrast, solutions like ours typically use data-led risk assessments, meaning that the risk of human bias is negated. This means that fintech is in a unique position that enables the industry to facilitate an inclusive economic recovery.
Do you see any other industry challenges on the horizon?
The UK has had an incredible fintech boom for SMEs but the challenge of creating solutions that are accessible to everyone still remains.
Can these challenges be aided by fintech?
Absolutely! Much of the UK’s fintech focus has been on Open Banking, but solutions that leverage blockchain and defi for example are still in their infancy yet can create truly accessible and equitable financial services.