As small businesses make up majority of the world’s businesses, their ‘well-being’ is often discussed in terms of what are the best ways to maintain it. Thanks to technology progress, small business owners are often presented with plenty of innovative and new solutions they could potentially use to boost their business. Particularly generous for SMEs were the recent advances of FinTechs and their furiously competitive race of “How can we shake up financial services?” Truth to be told, FinTechs really do want to challenge the old system and take banks down a peg. These incumbents having the hardest time to innovate and to innovate quickly are faced with a quite great phenomenon of FinTechs. Robo-advisers for value management, crowdfunding and peer-to-peer lending are only some results of the FinTech’s activity in the sector. What interests us the most here is a bigger and bigger attention given to blockchain and the rise of bitcoin.
This sphere is still in its infancy when it comes to implementing it in small businesses. The possibilities are still not fully understood; 34% business owners think of it only as a tool to reduce financial crime while 34% see its greatest value in increasing the speed and reducing the cost of back office functions.
Contrary to the popular opinion, blockchain can do much more than that. Implementing this by banks, governments and small businesses would mean the seamless and fast interaction between the entities, or transfer of documents and financial products like business loans.
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Some big banks already started working with blockchain and announced they would develop a blockchain-based trade finance solution for small enterprises. The solution will work by connecting the parties involved – typically, the buyer, buyer’s bank, seller, seller’s bank and transporters – on a singleplatform, accessible both online and via mobile. The reasoning behind it is to use blockchain to make registering payments and tracking shipments easier, as well as improving accountability.
What generally is most appealing when it comes to blockchain is keeping all records attached to a transaction on the shared technology thus reducing time spent on paperwork and administrative tasks which can be for instance particularly troublesome when applying for a loan.
Small businesses can benefit from blockchain through improved security, raising capital without major fees and having no middlemen involved in the transactions. The most controversial, but at the same time most interesting aspect is the lack of middlemen and the opportunity for businesses and individuals to trade or pay for goods directly. It should be also noticed that transactions made through blockchain are irreversible and data is stored forever thus any disputes could be solved immediately thanks to the transparency of blockchain
Weronika Slowinska is Copenhagen-based graduate, majoring in Business Administration and Information Systems. Passionate about digital marketing and innovation. Extremely fond of disruptive technologies and entrepreneurship. Weronika creates a high-quality content for UK-based Market Inspector, a comparison website.