Fintechs should address market gaps and seek partnerships to be successful, according to Singapore Fintech Association and consultancy EY.

Fintechs continue to fall behind banks with regards to providing financial services to micro, small and medium-sized enterprises (MSMEs), according to a report by the Singapore Fintech Association (SFA) and Ernst & Young (EY). 

As businesses' needs tend to be wide-ranging, most local firms preferred accessing financial services through banks, which have an entire breadth of services, the research report noted. 

Limited Product Offering

On the other hand, fintechs have limited product offerings, which may be a reason why most businesses prefer banks to them as banks offer the entire breadth of services, noted SFA and EY.

The report surveyed 272 MSMEs with about 60 percent of them being small and mid-sized businesses, whose annual revenues range from S$1 million to S$100 million. 

Data Concerns

The report also highlighted data protection as one of the top concerns raised by businesses of all sizes when using fintech's services, even if some of them have engaged these providers before.

«Fintechs can properly communicate their data protection standards and strengthen their brand image to not only retain adopters but also to attract non-adopters,» suggested SFA and EY. 

Gripes With Bank's Services

That is not to say that MSMEs do not have complaints with existing banks' services. Some believe that their banks fail to meet their expectations when it comes to pricing while others expect better speed and quality of service from their banks.

According to the report, about 43 percent of MSMEs are not happy with their current banks’ fees, which they think are too high. Separately, 33 percent and 32 percent of respondents expressed dissatisfaction with the speed of service and quality of service, respectively. 

Benefits Of Collaboration

Such pain points floated by MSMEs could be addressed by fintechs, especially when working in collaboration with banks, the report suggested. 

«Banks benefit from the agile and swift processes, innovative mindset, and speed to market offered by leaner and more versatile fintechs... whereas fintechs gain from banks’ financial strength and deep-rooted positioning in the financial services sector,» said the report