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The past few years have been challenging for the global economy. Just when we believed we had overcome the worst of the pandemic, much of the world is now confronted with escalating energy expenses, an increase in inflation and general banking turmoil. This particularly affects those who were already economically vulnerable.

In the United Kingdom, 12.9 million adults are considered to have low financial resilience, with approximately 34% of adults with savings either below £1000 or none at all. Access to finance can be a vital safety net for these individuals.

Fintech companies are well-positioned to assist individuals in managing their cost of living by providing a variety of products and services that aid in saving money, managing debt, and reducing expenses.

One of the ways that fintechs can help people manage the cost of living is by offering budgeting and money management tools. These tools enable users to track their spending and identify areas where they can cut costs. For example, a budgeting app might analyse a user's spending patterns and suggest ways to reduce expenses, such as switching to a cheaper cable or internet provider. By providing users with a clear picture of their finances, these tools can help them make better decisions about how to allocate their resources.

One illustration of this is P.F.C, a Mambu customer that offers a mobile-centric service combining a personalised app with a Mastercard debit program. P.F.C enables users to conveniently make purchases, divide expenses, and monitor spending. Users can also establish savings goals and make use of a clever budgeting feature.

Banking consumers can also benefit from a reduced cost of borrowing, especially when they have high levels of debt, which can be a major drain on their finances. Fintechs offer a range of lending products that can help people consolidate their debt and reduce their interest payments.

SMEs have also been hit particularly hard in recent years. The rising prices of materials, products, and human capital due to inflation is depleting business budgets which otherwise would be used for growth. According to a recent Paypal survey of over 1,000 UK based SMEs, 78% believed that the immediate cost of living is the most significant threat to their business in the coming years. In addition, there is  the worry of trade declining as consumers spend less - a common effect in times of high inflation.

Fintech lenders can assist SMEs in these uncertain times by offering alternative financing options with more favourable terms and conditions, some examples include:

  1. Offer flexible repayment terms - For instance, fintechs can provide repayment breaks or let SMEs make smaller, more regular payments, which can assist SMEs manage their cash flow during difficult financial times.
  2. Financial education - Lenders may offer financial support and education to SMEs so they may become more financially literate and handle their money more effectively.
  3. Faster approval and funding - Fintech lenders often have faster approval processes and can disburse funds to SMEs much quicker than traditional lenders. In times of uncertainty, these services can be better communicated to existing and prospective customers. This can help SMEs access much needed funds without having to go through lengthy application processes.

As illustrated, the cost of living can be a significant burden for business. Thankfully, there are companies in the market that were designed to benefit the banking consumer first, right from their inception by leveraging cloud technology.

For example, African-based Mambu customer 4G Capital provides unsecured business loans, enterprise training, and digital solutions to their customers. They use a combination of relationship management and AI technology to decrease the possibility of defaulting on loans. Customers can receive solutions that are tailored to their specific life and business requirements.

As 2023 is expected to be a financially difficult year, fintech companies have an opportunity to make a meaningful difference for families and small businesses by innovating and addressing some of the significant challenges.

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