Last Updated on
From 21-22 September, Strands participated in the 1st annual FINPYME Forum hosted by the Inter-American Investment Corporation (IIC) in partnership with the Inter-American Development Bank (IDB) and in collaboration with the SME Finance Forum.
The inaugural Latin American and Caribbean Forum for Innovation in SME Finance brought together over 400 leaders from financial institutions, government, civil society, industry and academia. Representatives from 42 countries gathered in Medellin, Colombia to exchange ideas on how to expand access to finance for small businesses in the region.
“That FinTech has been exploding worldwide is a fact, but the Latin American market has become especially hot over the past year and is on track to continue,” said Cesar Richardson, representing Strands as our VP of Sales and Operations in the Americas. “Part of this is due to the increased uptake of better online banking applications like the ones powered by Strands BFM, which helps small business owners and entrepreneurs manage their business finances better.”
The panels at FINPYME Forum revealed the harsh reality SMEs face when they seek financial support from the banking sector and how FinTech companies can help meet this need. On Day 2 of the event, Cesar spoke on one of the panels entitled Developing SME Portfolios through enhanced client relationships: leveraging Big Data, social media, and non-financial services. Joining Cesar onstage were representatives from Banco Santander, TEB, BAC and BCSG:
“Our panel discussed why banks are looking for specific solutions for SME customers, and we concluded that it was a sector that had been ignored in the past. Things are changing now that banks are realizing the high business value and potential SMEs offer, combined with the looming threat of FinTechs,” said Cesar.
“We also talked about how BFM differs from PFM: banks are for-profit businesses, and their health is based on current & future cashflows. Since SMEs don’t necessarily generate fixed incomes each month, this is not as easy to predict – BFM features like projected cash flows, alerts, and others can help with that kind of risk management. Finally, account aggregation came up as one of the most important aspects of business banking since most SMEs have multiple accounts and products, particularly loans, with so many different entities. In order for banks and SME customers to get the full financial picture, account aggregation simply has to be there.”
The main takeaway: a clarion call for banking innovation has been sounded loud and clear as Latin American SMEs continue to face barriers when it comes to business financial management.
According to the IIC, however, the traditional banking sector has heard this call of LatAm SMEs; that 20+ FIs attended FINPYME Forum is a clear indication of their interest in meeting the unique financial needs of small-to-medium sized business owners and advancing with new initiatives to support FinTech development and innovation, they said.
“In LatAm as in the rest of the world, FinTech is the missing piece of the puzzle, especially given the speed at which change needs to happen,” explains Cesar. “Exploring and collaborating on different models and implementing new technology is a given challenge the industry simply must take on – and partnering with an experienced FinTech provider is the quickest and easiest way for banks to compete.”
Other major conclusions of the event, which took place over two days in Medellín, were summed up nicely by the SME Finance Forum:
- clients must receive quicker and more personalized responses
- digital systems must be set up, and
- the industry must adapt to the needs of Millennials, the new generation of young people that will represent 50% of the banking sector’s clients in the next five years.
The 2nd FINPYME Forum will be held in Mexico, with the IIC announcing that it had reached an agreement with Nacional Financiera (Nafinsa) to host the 2016 event.