During 2020 and 2021, most financial institutions adapted to the trend of staying indoors. Those that didn’t are now facing necessary but sometimes costly changes.
The ongoing shift towards digitalization has made it possible to do more tasks online, like applying for loans, opening bank accounts, or getting credit cards. This change isn’t just for individual customers; it’s also affecting corporate finance management. For example, just a few months ago, getting factoring financing from home was impossible, but now it’s becoming common.
Digitalization isn’t the only challenge for IT providers. The new generation of entrepreneurs is also reshaping banking apps. Today’s 20- to 25-year-olds, and those slightly older, have grown up in a digital era with internet access, smartphones, and web apps. They’re taking over their parents’ businesses with a focus on technology, unlike before. They prioritize pushing their businesses forward using smartphones, rather than spending time on banking operations.
Finance must keep pace. Factors, banks, financial institutions, and IT providers need to adapt their applications and solutions to attract new entrepreneurs.
What do these new entrepreneurs want? They want banks to meet their needs.
This generation is the best judge of the system and knows what they need. Gone are the days of vendors and banks making decisions about functionalities without their input. In processes like factoring, it’s the end user who enters invoices, downloads reports, and checks payments. For them, transparency and intuitiveness are crucial. They don’t want to read manuals or waste time on poorly designed systems.
Younger entrepreneurs expect instant factoring decisions.
Fintech companies led the way by providing factoring decisions in under 10 seconds, mainly for microenterprises. Fast decision-making is becoming essential for SMEs too.
However, speed isn’t everything; security matters too.
More entrepreneurs are opting for non-recourse factoring, willing to pay more for peace of mind. The increasing ability of factors and financial institutions to transfer risk benefits entrepreneurs and the industry.
Factors can now provide information about potential contractor issues before collaboration begins, giving entrepreneurs a heads-up. Awareness of non-recourse agreements is growing, with over 60% of total agreements now being non-recourse.
They want automation from the moment they log in.
Reports should generate themselves and be easily accessible. Young businessmen want essential accounting documents generated regularly. AI-supported efficiency in contractor payment accounts will save time for both companies and financial institutions.
One-stop-shop convenience is a must.
The new generation demands a single platform for a wide range of services, eliminating the need for multiple systems, passwords, and contracts. Integration with accounting systems is crucial, ensuring invoices entered once reach the factoring system, saving time and reducing redundancy.
These are just a few examples of the demands the new generation of entrepreneurs will make, not only of financial service providers but of other providers too. While technology offers better solutions, interpersonal connections may suffer. Finding a compromise will be key. Can we deliver?
