How fintech innovation fuels Canadian entrepreneurs
The increased use of technology-enabled innovation has had a positive impact on the financial sector and society as a whole, according to a paper published this year by the World Economic Forum. For entrepreneur Steven Uster that’s not a surprise, as it’s something he witnesses every day in the Canadian small business community.
As the co-founder and chief executive officer of FundThrough, an invoice funding service and financial technology ( fintech) company that helps small and growing businesses meet their cash flow needs, Uster sees the disruptive effect of financial innovation in every transaction with his customers.
“Fintechs are using technology to reach and serve those innovators that are driving our economy — the entrepreneurs. Traditional lenders like the banks are not built to support these business owners as they grow. That’s where innovation in financial technology has really stepped in to fill that gap,” Uster says.
“We’re putting cash flow back in the hands of the small business owner. Today, having to wait 30, 60 or 90 days on invoice payments can put a massive wrench into a business’s ability to grow. With FundThrough, business owners can access that cash the instant they issue the invoice and start putting those funds to work right away.”
Using new technology and better customer experiences, it just takes two or three minutes to sign up for FundThrough’s services and access funds within 24 hours from as little as $500 up to millions. FundThrough is able to turn around a positive lending experience so quickly by connecting to tools and information that the business owner is already using — their accounting software and their bank account. Once the business owner connects their software, FundThrough’s credit technology goes to work. Within hours, the business owner has a customized funding limit and can start clearing their invoices and getting them paid with one click.
“Our customers don’ t have to go through a robust application process or wait a long time to get approved,” adds Uster. “And they don’t have to take money when they don’t need it. It’s all in their hands. Even repayment, which is broken up into bite- sized weekly payments, is automated.”
Having a FundThrough account provides small busi- ness owners with peace of mind knowing that they have it in their back pocket for whenever a cash flow hurdle arises. Instead of having to do backflips to figure out how to manage it, they can generate it themselves by using their own unpaid invoices, he adds.
“In many ways, our service is not true lending,” says Uster. “Customers use their own asset — an invoice — to access cash when they need it. That’s one of the things they tell us they love about the service.”
He stresses that FundThrough does not replace its customers’ need for other traditional banking services.
“We provide something that the banks can’t or don’t offer, and by doing so we complement their services,” he says. “Our target market is companies that are either too small or too new or growing too quickly to fit the credit profile of the bank. Interestingly, we’re seeing more and more of our new users telling us that they haven’t even bothered calling their bank for help because they already know it’s a battle not worth starting.”
Fintechs like FundThrough are essentially startup busi- nesses that identify pain points in financial services and solve them by using software and modern technology. They bring to market cheaper, faster and more customercentric services in areas such as money transfer, lending, investing and payments.
The World Economic Forum paper stated that the impact of fintechs will include: ❚ Increasing access to the financial system; ❚ Lowering costs; ❚ Improving risk management; ❚ Increasing competition and; ❚ Diversifying risk.
Launched in 2014, FundThrough is currently Canada’s leading online invoice funding service. Uster says fintechs, like many of the entrepreneurs t hey are supporting, are disruptive in a positive way.
“Technology like ours is being used to create new financial products and deliver them in a new way that suits our customers’ needs, particularly those who don’t necessarily fit the mould of the traditional banking system customer.”
Uster believes that fintechs are changing the competitive landscape in the financial service sector around the world, and will continue to do so as their numbers grow and they offer a wider range of new products and business models, which will create even more choice for their customers.
He points to the recent inaugural Singapore FinTech Festival as evidence of the rise fintechs globally. Close to 11,000 participants from more than 50 countries registered for the various events.
For some small businesses, the advent of fintechs like FundThrough is more than a convenience.
“StatsCan has reported that 50 per cent of small businesses fail within five years of starting up,” says Uster. “One of the main reasons is cash flow. Customers are taking longer to pay invoices and suppliers are demanding shorter payment terms. They’re getting squeezed on both ends.”
Cash flow management is crucial to the survival of a small business, and the best way to avoid a cash flow crunch is to look ahead, anticipate when it may happen and be ready with a backup plan to deal with it, he adds.
For an increasing number of small businesses, FundThrough is that backup — an electronic platform that lets them streamline their processes and reduce the time it takes to access funds needed for items like production costs, marketing or payroll.
WE PROVIDE SOMETHING THE BANKS CAN’T OR DON’T OFFER, AND BY DOING SO WE COMPLEMENT THEIR SERVICES