Is AI being used to empower MSMEs by Fintech Startups?
Is AI being used to empower MSMEs by fintech startups?
The MSME sector, sometimes referred to as the “engine of growth”, has made significant contributions to the country’s economic development. Many Fintech companies, which provide jobs to over 100 million people, have also rolled up their sleeves to promote MSME empowerment with AI technology. Numerous cases show the emergence of younger fintech firms that provide MSMEs with optimal financial goods and services while being commercially viable.
A significant part of India’s economy – often referred to as the “backbone of the nation” – is carried by the MSME sector, which accounts for 29% of the country’s GDP. It is essential to reduce unemployment in a method that creates many job opportunities around the nation. However, as the epidemic spread, it caused unexpected economic disruptions that impacted the MSME sector’s access to finance. In these difficult times, fintech transformed into a catalyst to scale MSMEs by offering specialized and creative solutions at reduced prices, causing a revolution in the ecosystem.
Improve the efficiency of transaction and accounting records
Accounting is a crucial, but difficult and expensive, activity. Even the owner of a neighborhood, be it a Kirana/grocery store or a neighborhood pharmacy, hires an accountant as they find it difficult to monitor their financial records on their own. However, the use of AI has promoted the preparation and analysis of financial data using digital techniques that can increase their income. One of the best technical advances made by fintech companies, artificial intelligence (AI), allows MSMEs to go beyond their areas of expertise and quadruple their financial efficiency. Accounting tasks that previously took hours or even days to complete can now be completed quickly and accurately with just a few clicks.
Keep a record of the tax return
Keeping track of your taxes is another time-consuming activity that, if overlooked, can have serious consequences. Any accounting or tax problem can quickly bankrupt the company. MSMEs can up their tax forecasting game and spot situations that could be indicative of fraud by using AI in accounting. Many AI-based fintech firms focus on platforms with powerful algorithms and predictive modeling that are unique and created to reduce the pain of developing businesses to help MSMEs overcome such issues.
Improvement of GST filing and accounting
Modern fintech firms offer services that allow MSMEs to save operational costs, control costs and avoid losses. For example, sophisticated AI-based accounting solutions can handle all accounting processes, including creation, validation and filing of GST returns. In addition, these technologically advanced accounting solutions come with comprehensive GST reconciliation features that allow users to identify the filing status of returns and suspicious areas where there may be uncertainty.
Improve collection measures
Debt levels are consistently increasing in the current market environment, be it for people or MSMEs. Unfortunately, not all borrowers are able to repay their debts to lenders. Since any failure in debt collection can stifle the financial activity of MSMEs, their main objective is to increase the success rate of debt collection. In light of this situation, AI-based systems are modernizing the debt collection process by analyzing the vast amount of data from multiple sources and using predictive analytics to detect risky credits. Early adopters of these systems can have significant benefits that improve the financial performance of their business.
Using analytics to improve decision making
More and more economic opportunities are being explored through the integration of AI in fintech. For example, AI finds sales leads, addresses sales issues, and improves overall sales performance in addition to establishing balance sheets, calculating net income, and providing other financial data sets for investigation. Because they are aware of the opportunities to improve the sales process through data and analytics, MSMEs are better equipped to understand their customers and develop thoughtful tactics.
Management of financial projections and risk assessment
As technology-based financial operations grow, the likelihood of criminal activity increases, including undervaluation of creditworthiness, violations of market risk restrictions, fraud and cyber-attacks. In particular, the development of artificial intelligence enables the sharing of regulatory and technological expertise in risk management operations. Technological breakthroughs in big data analytics, AI and blockchain are addressing regulatory concerns about implementing regulations in a way that protects consumers and investors in large companies.
The bottom line
There is no denying the crucial role MSMEs play in the Indian economy, but the following spectrum could use a little more strengthening. Exploiting and improving the potential of AI and ML in finance and accounting may achieve this. To further create an encouraging climate for entrepreneurial businesses, there is an urgent need to continue to strengthen the sector with the latest innovations and adoption of fintech solutions.
edited and proofread by nikita sharma
