In the bustling world of global commerce, Small and Medium-sized Enterprises (SMEs) stand tall as pivotal players. They're not just businesses; they're the lifeline of the economy, creating jobs and spurring innovation. Yet, when it comes to SME banking, they often find themselves in choppy waters. As the World Bank’s database acknowledges, SMEs are less likely to be able to obtain bank loans than large firms. Instead, they rely on internal funds, or cash from friends and family, to launch and initially run their enterprises, leading to a variety of challenges when navigating banking territory. The quandaries become even more prominent when micro and informal enterprises join the big picture.
Enter FinTech, transforming the landscape with its digital prowess. This article explores how it reshapes the financial world with SME banking software, addressing the businesses’ unique needs and opening up a world of possibilities.
What is SME Banking?
SME banking is a set of financial services custom-fitted for the smaller scale and specific needs of Small and Medium-sized Enterprises (SMEs).
What makes it important? According to the OECD, SMEs account for over 95% of firms and 60%-70% of employment. They also generate a large share of new jobs in the OECD economies.
Traditional banking services like loans, credit lines, and deposit accounts have been gradually sculpted to fit SMEs' demands and industrious nature. However, the journey wasn't straightforward. In the not-so-distant past, SMEs faced a banking landscape that was, more often than not, below accommodating. Navigating the traditional banking terrain felt like trying to solve a Rubik's cube blindfolded.
SMEs grappled with high fees, rigid credit assessments, and optimized one-size-fits-all solutions that barely fit anyone in practice. Securing funding was akin to a Herculean task, while personalized financial advice was rare and often accessible only to the privileged minority.
The disconnect between what SMEs needed and what banks offered was glaring. It was this very gap, this misalignment of services, that set the stage for the FinTech revolution that promised to tear down these barriers and usher in a new era of customization.
With the advent of FinTech, the world of SME banking is undergoing a tech-savvy makeover.
Imagine a banking universe where every service, every product, is tailor-made, just like a bespoke suit perfectly cut to fit its wearer. FinTech is adding smart, high-tech accessories to that already well-crafted suit. In other words, with SME banking solutions, their financial needs aren't just an afterthought—they're the star of the show.
As a more plastic illustration, picture a quaint local bakery that once spent hours on billing, now effortlessly managing transactions with a sleek digital payment platform. FinTech's integration into SME banking is revolutionizing their game, making financial management not just more convenient but also smarter and more intuitive.
In essence, FinTech isn't just redefining SME banking; it's reinventing it, making it more inclusive, more accessible, and more aligned with the dreams and realities of small and medium-sized enterprises.
Challenges Faced by SMEs in Banking
Limited access to capital
High transaction costs
Cumbersome payment processing
Complex financial management
Inadequate personalized services
Inflexible banking hours and locations
Credit scoring challenges
Lack of financial literacy resources
Data security concerns
Regulatory compliance
International transactions
Delayed invoice settlements
FinTech's innovative approach to these challenges improves the position of an SME in banking. It helps the companies operate more efficiently, scale effectively, and focus on their core business activities.
How FinTech Addresses SME Banking Challenges?
So, this is where FinTech starts as the hero. With SME banking solutions, it revolutionizes how these businesses interact and navigate the finance landscape.
Digital lending platforms, among other perks, are streamlining the loan process. It's like having a financial wizard at your fingertips, turning weeks of paperwork into a few clicks. Take, as an example, a small tech startup that accessed seed funding through a digital platform, catapulting it from a garage to the global stage. Mobile banking and AI-driven financial tools are also part of this FinTech arsenal, empowering SMEs with real-time financial insights and control.
Here is an overview of the most notable FinTech solutions to common challenges.
Access to Capital
Traditional lending can be a tightrope walk for SMEs, with banks often setting a high bar for loan approval. FinTech dances to a different tune, offering platforms like peer-to-peer lending and online crowdfunding, where SMEs can secure funds without the rigmarole of traditional banking.
Transaction Costs
For SMEs, every penny counts, but banking fees can take a big bite out of their budget. FinTech slashes these costs with sleek, automated processes, turning what was once a financial drain into a manageable trickle.
Payment Processing
Juggling payments with old-school systems can feel like navigating a hedge maze for SMEs. FinTech simplifies this labyrinth with swift, user-friendly payment solutions, ensuring SMEs keep their cash flow as fluid as a running stream.
Financial Management
Economic administration can be full of twists and turns. FinTech brings in a GPS in the form of intuitive digital tools that help SMEs easily chart their financial course, from budgeting to forecasting.
Personalized Services
SMEs often crave banking that understands their unique needs rather than semi-usable cookie-cutter solutions. FinTech tailors its suit to fit every SME, offering specialized products and advice that resonate with their individual business models.
Banking Hours and Locations
Traditional banking hours can be a hassle in the contemporary business landscape, feeling like a square peg in the round hole of an SME's schedule. With FinTech's 24/7 online platforms and SME mobile banking, financial management becomes a flexible process suitable to any timeline.
Credit Scoring
Conventional credit scores can unfairly label SMEs, leaving them in the financial cold. FinTech uses a broader lens, considering various data points to paint a fairer picture of an SME in banking, emphasizing their creditworthiness and warming them up to more funding opportunities.
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Navigating the financial landscape without a map can leave SMEs lost. FinTech provides this map through accessible, easy-to-understand educational resources, guiding SMEs toward better financial health.
Data Security
In a digital world, data leaks are like open floodgates for SMEs. FinTech reinforces the dam with advanced security measures like encryption and blockchain, keeping SMEs' financial data safe and dry.
Regulatory Compliance
Staying on top of regulations can feel like a high-wire act for SMEs. FinTech acts as a safety net, incorporating compliance features that help SMEs adhere to financial laws and standards, all without the circus act.
International Transactions
Global business can tie SMEs in knots with currency and cross-border payment complexities. FinTech untangles these knots, offering streamlined solutions for international transactions, turning a global headache into a walk in the international park.
Invoice Settlements
Late payments can strangle SMEs' cash flow. FinTech offers a lifeline with solutions like invoice financing and digital invoicing, ensuring payments flow as smoothly as a serene river, bolstering the SMEs' financial health.
Through these innovative solutions, FinTech addresses the specific challenges of SME banking, empowering companies to navigate the financial landscape with greater ease, confidence, and success.
Collaboration Between Banks and FinTechs
The evolving tale of banks and FinTech companies relies on partnership and cooperation, where each party brings its strengths to the table. This beneficial fusion thrives on blending the reliability of traditional banking processes with technological innovation.
Among the bountiful case studies, the best examples here might be the FinTech giants themselves. TransferWise, co-founded by Skype alum Taavet Hinrikus, is a prime illustration of FinTech innovation meeting SME needs. Originating from a personal need to avoid high fees in cross-border transactions, once an SME itself has grown into a leading player in the field, offering efficient, low-cost international payment solutions now widely used by other SMEs.
The stories of Lending Club and Revolut further epitomize the fusion of tech-driven solutions and traditional financial services, catering effectively to the global business needs of SMEs.
Opportunities for Growth in SME Banking
The business landscape for small and medium-sized enterprises is changing, closely following FinTech innovations as they unlock new growth opportunities. Digital lending platforms use algorithms to assess creditworthiness, providing quicker and more accessible funding options. This is particularly beneficial for businesses previously overlooked by conventional banks. In addition, personalized banking services involve a variety of integration possibilities and a level of customization that was previously out of reach for many.
Example: A boutique coffee shop with a stellar prospect that may struggle with traditional bank loans due to the nature of its business.
In addition, AI and data analytics are revolutionizing SME banking, transforming guesswork into strategic decision-making. SMEs can leverage these tools for cash flow forecasting and customer spending analysis, enhancing their inventory management and marketing strategies in return. To quote Wealth and Finance, “Thanks to the advent of predictive analytics tools such as machine learning algorithms or modeling software, SMEs can now look at historical data and make projections for what may happen in the years ahead.”
Example: Small construction companies can now streamline their financial operations with customized solutions from a single FinTech platform.
FinTech is also paving the way for SMEs to expand into international markets. Simple, efficient handling of international payments and currency risk management opens global opportunities once hindered by complex banking processes. A study conducted by Chinese experts, based on the data of listed small and medium-sized enterprises from 2011 to 2020, proved that FinTech in banking can significantly ease the financing constraints of SMEs. Their results showed a decrease of 0.0767% for every 1% increase in FinTech.
Example: Small artisanal soap makers or chandleries are often confined to local markets. By utilizing a FinTech platform to seamlessly handle international transactions and manage exchange rates, they gain the opportunity to expand their customer base and reach multiple countries with ease.
The Future of SME Banking
It doesn’t take a crystal ball to detect that SME banking’s future sparkles with FinTech innovation. Technologies like AI, blockchain, and open banking evolve day by day, promising to revolutionize this space further.
SMEs have already begun managing their finances with the help of AI assistants, in addition to using blockchain for secure, transparent transactions. This future is not just a possibility; it's unfolding before our eyes, reshaping the entire banking landscape into a dynamic, tech-savvy ecosystem.
Wrapping Up
In summary, the marriage of FinTech and SME banking is more than beneficial—it's transformative. It's a venture of overcoming challenges and seizing opportunities, where SMEs are no longer bystanders but active players in the banking arena. As FinTech continues to evolve, it's clear that SME banking will never be the same.
In such an inspiring landscape, companies like Intellectsoft emerge as key players with their tailor-made FinTech solutions. They harness their vast global experience to fuel SME growth, providing bespoke financial technology platforms: innovative, practical, and accessible.
Intellectsoft's commitment to delivering top-notch services ensures that its software is seamlessly woven into the fabric of SMEs' business operations, empowering them to navigate the complexness of the global market with confidence and efficiency.
FAQ
How is digital banking for SMEs reshaping the banking landscape?
Digital banking is revolutionizing SME banking, making it more agile, accessible, and user-friendly.
What are the newest innovations in SME banking software?
SME banking services are constantly evolving, with cutting-edge technologies like AI and blockchain leading the charge.
Why should SMEs turn to FinTech for their banking needs?
FinTech offers SMEs a world of advantages - from cost savings to enhanced financial control.
The hospitality industry depends a lot on keeping customers happy, but it’s getting harder to attract and keep them. The pandemic hit this industry hard, and now market competition is tougher than ever, with competitive offerings swaying customers. Hospitality businesses are willing to spend big to win customers back. The main questions for many are: how can we stay ahead of the competition, keep our customers, and increase revenue? Keep reading—we’ve got some answers.
Customers today have so many options that getting their attention is a real challenge. It’s not easy to make them choose your business over others. What worked 10 years ago doesn’t work the same way now. Back then, people often chose businesses based on reputation. But with new types of businesses (boutique hotels, craft cafes) popping up or big enterprises getting a new strategy, expectations have changed. The good news is these businesses have shown what works: great customer service. They focus on personalizing the experience, making things easy for customers, offering loyalty programs, and using smart technology.
In this article, we’ll explore these tech strategies and show you how they can help your business grow, and double the revenue. Keep reading to learn more!
The Importance of Customer Satisfaction in the Hospitality Industry
Customer satisfaction, which equals exceptional customer experience, is the backbone of the hospitality industry. It plays a central role in driving revenue and loyalty, as satisfied customers are more likely to return and recommend a hotel, restaurant, or other hospitality business to others. In fact, a study by the Harvard Business Review found that a 1% increase in customer satisfaction can lead to a 0.5% increase in revenue. Moreover, loyal customers are more likely to forgive mistakes and continue doing business with a company, even if they experience a negative encounter.
Let's quickly review the challenges the hospitality industry is facing right now so we can move on to the solutions and our case studies.
Challenges in Hospitality
As businesses navigate the changes in the hospitality industry, there are some key areas where a little improvement can go a long way. From improving customer service to embracing digital transformation and tackling labor shortages, we’ll take a closer look at today’s biggest challenges—and, more importantly, how technology can step in to help. Let’s get started!
Poor Customer Service
Even with strong and high-quality business offerings, poor customer service can drive potential customers and existing customers away. Common issues include:
Long wait times in customer service queues (it is worth remembering that our attention spans 8 seconds, and we live in a very busy world, so quick and efficient responses are more important than ever.)
Poorly trained customer service representatives
Lack of follow-up
Services not being done properly or quickly
Recall issues that require multiple service calls
These problems can frustrate customers. But, at Intellectsoft, we believe that the right approach, combined with technology, can address them effectively.
Digital Transformation Gaps
Approximately 50% of hotels are adopting new technologies, with 43% automating repetitive tasks and 39% upgrading existing systems. Source: workstaff.app
While many businesses are adopting digital solutions, some still struggle with outdated systems and fragmented data. Legacy companies often face chaos when trying to manage their data and create new systems or add features.
Some of the recent examples include clients coming to us to create AI solutions for their services while their data simply was not ready for the advanced tasks. We advise stepping back, communicating with a company objective, and working on keeping the data clean (centralized, structured, and segmented).
When we’re asked to create advanced systems using AI, we always emphasize the importance of organized data. To train AI and build such complicated systems that truly work, you need to start from the very beginning—collecting, storing, centralizing, and organizing it. We encourage our clients to align all departments to work internally on the data so we can create a unified digital system that delivers personalized experiences.
If you’re unsure where to start with your data, we can help. Collecting feedback at various touchpoints along the customer journey is crucial for gaining insights into customer satisfaction and loyalty. Book an IT consultation with us, and our experts will guide you in mapping out a path to get more from your data and build a system that works for your business and team.
Reskilling Staff
The pandemic hit hard in early 2020, especially for the hospitality and travel industries. Even five years later, many businesses are still feeling the impact. Recruiting and retaining skilled staff has become a major challenge post-pandemic.
Reskilling to address technology’s impact is of utmost importance, as about 40% of hotel General Managers place it among their top three workforce challenges.
We strongly believe that adopting the right technology can help. For example, creating an app to train your staff not only saves time but also ensures consistency in learning. AI assistants can also work alongside your team, helping with tasks like recruitment (providing industry insights, crafting emails) and staff training. Imagine having an app dedicated to making your team’s work easier and more efficient!
How Technology Tackles These Challenges and Supports a Customer-Centric Hospitality Culture
Automation, AI, and similar technologies may threaten many. However, the debate about replacing humans isn’t about that—it’s about cooperation and working hand in hand with technology to achieve the highest standards and establish brand-new “golden standards.” Technology is here to assist staff in listening to and collecting customer insights from data.
Let’s review some of our cases to see examples of how technology helps improve customer experience and supports customer service.
Examples of Intellectsoft projects
Property management systems (PMS)
We created a web platform and mobile app that makes managing daily tasks easier and offers extra services to improve residents’ experience. It gives a clear overview of daily activities and helps with managing units and users. Residents can easily book amenities, submit service requests, and report incidents. The platform also includes features for equipment management, key instructions, workflows, and custom permissions. This makes it easier for staff to stay on top of equipment and ensure residents have all the information they need. Plus, tools like announcements, quick votes, a forum, and a community calendar help build a connected and engaged community.
Guest Experience Management App
Our next app helped our client improve their guest experience by replacing printed marketing materials and the need for phone calls with a smart solution. Now, guests can easily order in-room dining, make reservations, and interact with staff— through a simple tablet in their room. The solution includes three parts: a custom in-room tablet with a variety of services, an admin panel for hotel staff and service providers, and a backend system that connects everything together. This approach makes things easier for guests and staff, improving both convenience and efficiency.
Existing Customers First: Building Loyalty with Personalized Touchpoints
Keeping existing customers is not just a strategy; it’s well-known that retaining existing customers is more cost-effective than acquiring new ones. In fact, research shows that it costs five times more to acquire a new customer than to retain an existing one. KPMG named customer retention as the number one revenue driver for the company.
Moreover, a 5% increase in customer retention can lead to a 25% to 95% increase in profits, showing the significant impact loyal customers can have on a business’s bottom line. Retention strategies, like personalized experiences and loyalty programs, can foster long-term relationships and generate recurring revenue, ultimately making them an invaluable part of any business model.
Personalization: How Technology Can Help?
Everyone loves to feel special—it’s part of being human. In hospitality, personalization has evolved from being a luxury to an essential standard. With the right technology to manage your data effectively, you can deliver those “wow” moments that guests won’t forget.
More than half of hotel chains are already using personalization features on their websites, booking platforms, and apps, and another 39% are planning to follow suit soon. They’re tailoring experiences to fit guest preferences perfectly.
Source: Deloitte
How does technology make it happen?
CRM Systems: They help you keep track of guest preferences, booking history, and special requests so you can offer services tailored just for them.
Loyalty Programs: Personalized rewards and offers show your guests that you value them, keeping them coming back for more.
AI Personalization: AI analyzes guest data to predict what they’ll love (from room upgrades to local recommendations) before they even ask.
IoT Gadgets: Smart room features like voice-activated assistants, or temperature controls adjust to your guests’ preferences, making their stay more comfortable.
With tech-powered personalization, you’re building loyalty and maximizing the lifetime value of every customer.
Our Case Study: Smart Hotel Management & Loyalty Program
For one of our clients, we created a smart room solution, complete with a custom IoT system. Guests can use a mobile app to control services, explore amenities, and find resort information-- with a special touch to their suite type. For the client’s entertainment business, we improved their legacy software by running a full IT and code check, fixing issues, and making the system better for customers.
Along with that, we developed a mobile app for the loyalty program, allowing businesses to effortlessly reward their customers and keep them engaged with exclusive benefits.
Our solutions not only helped the client with special experiences for guests; it also improved operations, cutting costs by eliminating inefficiencies. Here's what our experts shared:
"We transitioned away from ESB (Enterprise Service Bus) systems, which previously cost millions, and replaced them with more efficient, self-managed solutions. Similarly, we’ve implemented Device Farms that improved operations and saved resources."
Leveraging Software to Increase Upsell Opportunities
Here are some examples of tech tactics that will help your team sell more and introduce new offerings to existing customers, improve overall efficiency leaving your team grateful:
Dynamic Pricing Algorithms
For finance and marketing teams, manually calculating pricing by segment to introduce your clients can be incredibly challenging. AI-powered tools can strongly optimize these strategies by analyzing your database in detail.
Upselling via Apps
Boosting revenue in the hospitality business often comes down to personalized experiences. Imagine this: a guest books a room, and then your app suggests a spa package or a room upgrade at just the right moment. Later, it nudges them to book a dinner reservation or a guided tour designed to their preferences. With apps offering these personalized recommendations during and after bookings, you’re not just increasing your revenue per guest but also skyrocketing their experience. And you do it in a sustainable way, not by speculating, but by offering what your customers desire based on their previous experiences. It’s a win-win: seamless, helpful, and far from pushy.
Inventory and Resource Management Software
Making every resource count in your hospitality business is key. Inventory and resource management software allows you to effortlessly track everything from linens to room availability, ensuring nothing goes to waste. Having real-time insights to reduce overstock, avoid shortages, and optimize operations assists sustainably keep everything under control and know what you need to focus more. It helps maximize room occupancy by aligning bookings with available resources, ensuring every room and item is used effectively. This approach leads to smarter management, better guest experiences, and a noticeable boost to your bottom line.
Adopting these strategies not only optimizes your operations but also drives business growth. Ready to discover how technology can elevate your goals? We’re here to create a tailored solution for you.
Steps For Implementing a Customer Service Technology Solution
Improving customer service in hospitality doesn’t have to be a daunting task. With the right technology, you can smooth the path of your operations, speed up response times, and elevate the overall guest experience. Here’s where you can make it happen:
1. Understand Your Needs
Start by identifying the challenges your business is facing. Are you struggling to manage high volumes of inquiries, track customer feedback, or personalize the guest experience? Pinpointing your needs will guide you to the best solutions.
2. Pick the Right Tools
Choose technology that aligns with your goals. Look for solutions that are scalable, easy to use, and integrate effortlessly with your current systems. Options like CRM software, live chat tools, or a guest experience app can make a difference.
3. Equip Your Team
Technology is only as effective as the people using it. Train your staff to make the most of the new tools, so they can deliver exceptional service and resolve issues quickly. Confident, well-equipped staff creates happy, loyal customers.
4. Keep Improving
Once implemented, monitor how well the solution works. Are response times improving? Are customers more satisfied? Regular evaluations will help you fine-tune your approach and keep things running harmoniously.
Some Tech Ideas for Hospitality Businesses
CRM Software: Manage customer interactions and preferences.
Guest Experience Apps: Delight guests with personalized experiences right at their fingertips.
Amenity Management Systems: Simplify operations for everything from room service to facility bookings.
Live Chat Tools: Offer instant support and answers.
Social Media Management Tools: Keep customer interactions engaging and organized.
Integrating these strategies will not only improve your customer service but also deliver unforgettable customer satisfaction, loyalty, and, ultimately, your bottom line. Ready to take the next step? Book a consultation with our experts.
Conclusion
To wrap up everything we've discussed, customer satisfaction and experience are at the heart of hospitality. Retaining customers is more than just keeping them around—building strong, long-lasting relationships and consistently meeting their evolving needs. By understanding their pain points and offering personalized solutions, you can inspire loyalty and drive progress. With the right technology and continuous improvement, your business can stay ahead, let go of what no longer serves you, and keep growing.
At Intellectsoft, with over 17 years of experience in software development, our expert team is ready to help. We create everything from mobile apps to full-fledged portals and systems, leveraging the latest technologies like AI, Cloud, and Machine Learning. With deep experience in the hospitality industry, we’re here to craft personalized solutions that bring your business unforgettable customer experience and retain your valuable clients.
Ready to double your revenue and level up your customer retention strategy with personalized technology? Contact our experts, and we look forward to working hand in hand with you to build or revitalize the perfect app or system for you.
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