Covid impact: SMEs become tech savvy

Covid-induced disruptions have helped change the approach of small businesses toward technology. Technology is now seen as the key enabler for small firms to stay alive. “Earlier, tech was seen as an expenditure; now it is seen as sustenance and help,” said R Narayan, president of FICCI-CMSME and CEO of Power2SME at the ET Financial Inclusion Summit. To be sure, the adoption of tech by MSMEs has reduced the competitive edge big companies enjoyed. “The good news is in the old days, technology was a divider. Only corporations with deep pockets could afford latest technology,” said Sheela Nambiar, senior director, Oracle India. “Today, it is a leveller.” At the centre of this digital revolution is the smartphone, which has enabled MSMEs to embrace tech. Mobility has forced people to move to the cloud without realising it. Plus, with smaller data plans, people have been using internet in a cost-efficient manner. “For costs, we see software-as-a-service (SaaS) or very low price subscription models helping MSMEs digitise their businesses,” said Anirban Mukherjee, CEO, PayU.But is it fair to expect MSMEs to adapt to subscription as a service? Perhaps. “We have been working with different MSMEs and we see that clarity has emerged on what needs to remain on-premise and what needs to go on the cloud,” said Oracle’s Nambiar. Still, critical challenges facing MSMEs remain. That’s where technology could make a difference. It is helping solve the problem of working capital. From getting KYCs done to signing user agreements, MSMEs are doing interactions using internet and generating data. Financial institutions, too, are finding innovative ways of lending using data and tech. “There are NBFCs and banks that want to lend to merchants for their working capital requirements and we lend with card receivables,” said Deepak Chandnani, MD, Worldline South Asia & Middle East.Some banks are also experimenting with non-collateral loans but the question is about scaling up. “For cash-flow based MSMEs where bills are generated every hour and there are predictable cash flows, a lot of awareness is being created by people like Anirban and Deepak, and this segment has a huge word-of-mouth ability,” said Narayan. Tech-based lending isn’t possible without quality data, but MSMEs are generating an abundance of it. “While the government has taken measures to help MSMEs in difficult times, more can be done. At Mastercard, we have been witnesses to MSMEs’ pain because of which we pledged `250 crore to help them recover,” said Vikas Varma, COO, (South Asia), Mastercard

from Economic Times https://ift.tt/3zhAICL