Technology is fundamentally disruptive because it ushers in changes that replace the existing order with a new order. The annals of time are littered with thousands of events in which technological advancements have been instrumental in changing the course of history. In this age, technology is causing massive paradigm shift in the financial services industry. This piece examines some key developments showing how technological developments make it easier for businesses to access funding.
Decentralized information streams
One of the major changes that technology is exerting in the financial services industry to the benefit of business owners is the decentralization of access to information. In the years gone by, the only loans and other types of financing available to businesses owners was limited to offers available from their local community bank.
Now, major stakeholders such as smallbusinessloansaustralia.com provide valuable information to businesses about the different financing options available from lenders within and outside their cities. In addition, the decentralization of financing information makes it easy for businesses owners to compare different loan offers to find the best deal even before they go ahead to begin the loan application process.
Faster and easier application processes
Many banks, credit unions, and government agencies that provide financial services to businesses now have a digital presence in the form of a website or mobile app. Digital technology is cutting the down the time it takes business owners to begin and complete a loan application process. Now, you don’t have to show up physically at a bank to pick up application forms. You can fill in your application, upload supporting documents, check up on the status of your loan application and get a response on the approval right there in your office on your smartphone or computer.
Algorithms make impersonal unbiased decisions
Many would love to believe that people who work in the financial services industry are logical, unbiased fair people – and they mostly are. However, some business owners can testify to the fact that they crossed all the “Ts” in their loan application, provided all the supporting documents, and still got their application denied due to human error. Nowadays, many financial services firms trust computer algorithms to calculate the risk of default so that the humans involved in the process can make logical unbiased decision about your application.
Improved access to funds beyond national borders
Technological developments are also making it easier for people to access business financing beyond national borders. For instance, startups can now get people in different countries to back and support their product development efforts using crowdfunding platforms. In addition, businesses that are open to securing funding from VC firms can easily create pitch decks to attract foreign investors. More so, the internet makes it easy for businesses to connect with suppliers in international markets in order to work out financing alternatives that might not be on offer with the suppliers in their local market.
Increased accessibility to funds from alternative sources
Many business owners are finding it much easier to raise financing from alternative sources other from traditional financial institutions. Traditional financial institutions are fundamentally conservative and they are somewhat wary of lending money to businesses in some unproven industries. Startups who usually don’t qualify for business loans can find it easier to raise funds from alternative lenders who might be more willing to lend money to an unproven business.