How Fintech Can Help Catalyze Growth of Women-Led SMEs in India

Fintech in the ecosystem could work towards creating a directory for the growth of women-led SMEs in India

The financing gap is one of the crucial pain points for the growth of women-led SMEs in India, the fintech ecosystem can help unleash their potential by not just bridging this gap, but by meeting several non-financial needs that need to be addressed.  

Bridging the financing gap through data: 

As per experts, the finance gap for women-owned small businesses in India is $158 billion approx. , as most women-led businesses have to finance themselves or opt for informal credit options as banks and other financial institutions remain unsure of the business models and the potential or guaranteed returns on loans.   

One of the biggest barriers to financial institutions supporting women entrepreneurs is the lack of reliable data segregated by gender. 

As per a World Bank report, woman entrepreneurs in India face a rejection rate of 19 percent by lending institutions in India – more than twice the rate of 8 percent for men. 

While the government and formal financial institutions have launched schemes to meet the specific business needs of women-owned businesses, a lack of awareness and outreach – especially in rural areas – has limited the impact.

There is a need for regional assessments that provide granular insights into the trends around access to financial products for women entrepreneurs. 

Most formal financial institutions need to assess credit history before lending, however, a fintech with their custom-built API-based platforms and AI/ML algorithms can access numerous alternative sources of data (GST, mobile data, social, statutory payments, quality lead scoring, litigations, etc.) and analyze them through thousands of data points, making credit underwriting and assessment robust and easier for lenders. 

Fintech can step in to help in the rapid calculation of their creditworthiness, and thus let them access hassle-free and quick credit options.

Foster diversity through mentoring and advisory:

The 2020 MasterCard Index of Women Entrepreneurs also states that more than 60 percent of Indian women entrepreneurs rarely see opportunity. 

As an ecosystem, we need to foster diversity, as it is crucial for holistic growth and helps all aspects of the business. Fintech’s focus on women as a segment should be higher and that can be achieved through mentoring more and more women while on their entrepreneurial journey, simply encouraging them is not enough anymore.

Fintech should become incubators for the growth of women-led SMEs in India that can undertake start-out services like business planning assistance, groundwork support, basic advisory services, creating awareness of government-led or institutional financial schemes, etc. through masterclasses, workshops, and AMA sessions with experts. 

One on one, support can also be given to help people understand the basics of creating a business strategy or even something as crucial as filling out a loan application form. 

These are small but important steps that can help women, entrepreneurs, tide through the most difficult teething phases of their businesses. 

Fintech must offer the growth of women-led SMEs in India the solution to manage financial admin on one platform, and reduce their dependence on others, this will help SMEs save time and money on doing businesses and foster growth.

Accountancy and Financial Planning:

Most small and medium enterprises, by their very nature, will have seasonal ups and downs; uncertainty is something that cannot be ruled out completely, and hence they must manage their cash flow correctly. 

Fintech can use reliable credit risk models that can help women-led businesses enhance their financial planning knowledge. 

By setting up in-house mentor panels, fintech can help women-led small businesses learn how to forecast short-term cash flow, liquidity crunch, negative cash flow trends, and unplanned or unexpected expenses, all the way through to the basics of filing tax returns, GST, invoicing, managing payroll, etc. These services can be extended over and above the financial products we offer.   

Marketing and Sales:  

It’s time for women entrepreneurs to have that much-deserved spotlight shine on them, it’s time for them to be the heroine of their business venture. 

In addition to working with the growth of women-led SMEs in India as part of our ‘Women in Business initiative, we also celebrate entrepreneurship by making them our brand ambassadors across our marketing and advertising campaigns. 

Women entrepreneurs should promote their businesses through self-facing marketing and digital campaigns since no one knows their business better than them. Being authentic is, by far, the most important virtue of being successful, and what’s more effective than putting yourself out there to do it. 

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