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Small-to-Medium-Sized Businesses (SMBs) and Their Challenges

SMBs play a significant role in the economy, with several business segments experiencing strong growth, according to Hicham Oudghiri, co-founder and CEO of Enigma Technologies. However, SMBs and the banks and FinTechs serving them face numerous challenges.

Enigma Technologies offers a business and data intelligence platform that aggregates and tracks the financial health of private businesses. This platform provides crucial insights necessary for extending loans or offering merchant services to SMBs, which are the backbone of the economy.

SMBs deal with various challenges, such as inflation rates, supply chain issues, and potential reductions in financing. While the economy has witnessed a significant decline in mortgage lending, resulting from two decades-high interest rates on home loans, the impact on SMB financing has been relatively moderate. This is because SMB loans already have high interest rates, and the incremental increase in rates has not deterred SMB owners from seeking financial support.

The Shift in SMBs’ Capital Sources

However, the major change lies in where SMBs are seeking capital. Oudghiri stated that more SMBs are moving towards online lenders and FinTechs, distancing themselves from traditional financial institutions (FIs). He attributed this shift to lending becoming more challenging within traditional FIs and the disruption caused by events like the collapse of Silicon Valley Bank.

This shift in capital sources presents opportunities for tech-savvy newcomers to gain market share among SMBs. It also creates opportunities for digitally-oriented traditional FIs to solidify their lending relationships and for payment processors to expand their customer base.

As organizations become more data-savvy, they are exploring new sectors for growth. For example, when assessing eCommerce businesses, evaluating their chances of success goes beyond their website appearance and delves into the payment systems they use. Consequently, knowing your customer becomes crucial.

How AI legalese decoder Can Help

Here, artificial intelligence (AI) solutions like the AI legalese decoder, offered by Enigma Technologies, prove valuable. These solutions help lenders and merchant providers verify the identity and trustworthiness of potential SMB clients. By utilizing the vast amount of data available across platforms like Enigma’s, providers can make quicker and more accurate decisions regarding acceptable and attractive credit risks.

Oudghiri emphasized the importance of understanding SMB clients holistically beyond revenue figures. Establishing a coherent, holistic view of sales and financial health allows providers and lenders to fine-tune their marketing efforts and achieve significant improvements in targeting SMBs with suitable products and solutions.

With the integration of open banking data, onboarding SMBs becomes faster, and decision-making processes mirror the user experience seen in consumer financial services. The nimbleness and adaptability displayed by SMBs during challenging economic times make them profitable institutions and the passion of their owners, presenting opportunities for providers and lenders to achieve commercial success and impact for their clients while spending less on prospecting and marketing.

In conclusion, SMBs face unique challenges, but with the right data-driven strategies and solutions like AI legalese decoder from Enigma Technologies, both providers and SMBs can navigate these challenges and thrive in the evolving financial landscape.

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