SME Banking | Modefin

SME Banking

The SME (Small and Medium Enterprise) segment is a valuable market for banks. In countries across the world, SME’s are responsible for 90% of the employment and contribute about 60% of the GDP. In Africa specifically, they account for 90% of companies, providing nearly 80% of the employment in this region.

Considering their value, banks must become enablers, rather than suppliers. Such a proactive move will help SME’s grow while expanding the bank’s reach in the market. This strategy requires a fresh approach where banks will offer paperless onboarding, conversational banking, easy access to credit, and other services to SME’s and their customers.

What our technology offers

There are several challenges in the SME banking sector. Further, the pandemic has forced significant structural and behavioural changes in the functioning of small and medium enterprises. To combat this, banks must offer innovative, technology-based solutions to SMEs.

Cash Management

Riding on a service provider’s platform (Modefin), banks can offer a cash management system or business finance management that SMEs can use for their day-to-day operations. The platform can help SMEs with financial administration, synchronise and reconcile accounts and invoices, understand the cash flow situation, and attract more customers.
Since banks are the primary integrators in this partnership, the scale of investment and cost of execution for SMEs is zero.
SME financial management that banks can offer:

  • complete digital accounting system for day-to-day operations
  • Accounts receivables/payables management
  • Digital recon
  • Tax and compliance

A Complete View of the SME Business

The business transactions of SMEs are analysed to understand and customise the business experience. As businesses grow, banks can provide value-added services based on the activity. For instance, Family Bank in Kenya came out with a mobile banking app called PesaPap (developed by Modefin). This app among other things, allows you to create a PesaPap Wallet. SMEs can apply for and receive a loan and create a savings plan while earning interest on the same. As they use the app, the credit history is recorded. Based on this data, banks may offer SME Business Loans, Supplier/Invoice financing, or other value-added services.

POS Lending

As per numbers posted by McKinsey (McKinsey Consumer Finance Pools), the outstanding balances on Point-of-Sale Financing almost doubled from $49 billion in the year 2015 to $94 billion in 2018. These numbers are expected to go even higher (almost $160 billion) in 2021. This indicates that the concept of buy-now, pay-later (POS lending) has been steadily gaining momentum.

Banks can offer POS lending option to merchants by partnering with technology platforms. With this, merchants can offer to finance consumer purchases while expanding the pool of potential customers. As technology firms handle the technical aspects of the solution, banks can focus on attracting and growing their merchant relationships.

mPOS

Mobile Point-of-Sale solutions are effective, flexible, and scalable. mPOS allow merchants to use their mobile phones accept digital payments (like QR payment, NFC payment, OTP payment or even Card payments) through smartphones and/or tablets. This enables merchants to attract more customers using technology without investing in expensive traditional POS machines. Any smartphone can be converted into a POS device lowering the setting up and operating costs for the merchants.

QR Payments

The pandemic has pushed merchants to adapt to newer ways of doing business. Apart from redesigning storefronts and widening delivery options, merchants are looking to offer more methods of payments. QR code-based digital payment solutions offer a simple and secure way for customers to make payments at merchant locations/outlets. Such digital payment solutions can be easily integrated into the service offerings made by banks. The infrastructure is light and allows merchants to receive/issue payments to/from their current accounts directly.

What our technology offers

There are several challenges in the SME banking sector. Further, the pandemic has forced significant structural and behavioural changes in the functioning of small and medium enterprises. To combat this, banks must offer innovative, technology-based solutions to SMEs.

Cash Management

Riding on a service provider’s platform (Modefin), banks can offer a cash management system or business finance management that SMEs can use for their day-to-day operations. The platform can help SMEs with financial administration, synchronise and reconcile accounts and invoices, understand the cash flow situation, and attract more customers.
Since banks are the primary integrators in this partnership, the scale of investment and cost of execution for SMEs is zero.
SME financial management that banks can offer:

  • complete digital accounting system for day-to-day operations
  • Accounts receivables/payables management
  • Digital recon
  • Tax and compliance

A Complete View of the SME Business

The business transactions of SMEs are analysed to understand and customise the business experience. As businesses grow, banks can provide value-added services based on the activity. For instance, Family Bank in Kenya came out with a mobile banking app called PesaPap (developed by Modefin). This app among other things, allows you to create a PesaPap Wallet. SMEs can apply for and receive a loan and create a savings plan while earning interest on the same. As they use the app, the credit history is recorded. Based on this data, banks may offer SME Business Loans, Supplier/Invoice financing, or other value-added services.

POS Lending

As per numbers posted by McKinsey (McKinsey Consumer Finance Pools), the outstanding balances on Point-of-Sale Financing almost doubled from $49 billion in the year 2015 to $94 billion in 2018. These numbers are expected to go even higher (almost $160 billion) in 2021. This indicates that the concept of buy-now, pay-later (POS lending) has been steadily gaining momentum.

Banks can offer POS lending option to merchants by partnering with technology platforms. With this, merchants can offer to finance consumer purchases while expanding the pool of potential customers. As technology firms handle the technical aspects of the solution, banks can focus on attracting and growing their merchant relationships.

mPOS

Mobile Point-of-Sale solutions are effective, flexible, and scalable. mPOS allow merchants to use their mobile phones accept digital payments (like QR payment, NFC payment, OTP payment or even Card payments) through smartphones and/or tablets. This enables merchants to attract more customers using technology without investing in expensive traditional POS machines. Any smartphone can be converted into a POS device lowering the setting up and operating costs for the merchants.

QR Payments

The pandemic has pushed merchants to adapt to newer ways of doing business. Apart from redesigning storefronts and widening delivery options, merchants are looking to offer more methods of payments. QR code-based digital payment solutions offer a simple and secure way for customers to make payments at merchant locations/outlets. Such digital payment solutions can be easily integrated into the service offerings made by banks. The infrastructure is light and allows merchants to receive/issue payments to/from their current accounts directly.

Our Success

Equity Bank

Equity Bank efforts to digitalize retail commerce operations through EazzyPay has paid off; Captures 15% of the total mobile money transfer market within the first year of its operation.

Equity Bank

Family Bank with the help of Modefin, came up with the product/service called PesaPap. This product is pitted directly against the M-Pesa app (Safaricom).

Accelerating the digital transformation of banks with intelligent & innovative digital banking solutions

Modefin offers a suite of ready-to-market digital financial products tailored to meet the needs of the banks and financial service providers and helping them to accelerate digital adoption.

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Modefin Clients

The meaning and depth of any business are valued considering the customers it has garnered. We at Modefin are grateful to our customers and clients whose patronage has helped us build on our efforts to succeed and give our best. These are the very persons, institutions and industries who vouch for our efforts and acclaim the reliability of our solutions. Our customer experience goals gain value when we receive affirmation of our efforts.