How can financial service providers take advantage of the rapid growth of the eCommerce market?
Covid-19 has had an extensive impact on many aspects of modern life, one of which being how we shop. Since the pandemic began, there has been a considerable spike in online shopping aided by our ever changing way of life. A shift that was already taking place, thanks in part to the rise of the digital wallet and the move towards a cashless society, has been propelled forward several years faster than it would have been otherwise.
Times are changing
In a new era where high street giants like Debenhams, Topshop, and Dorothy Perkins were slain within months, smaller stores had to act quickly to ensure they didn’t suffer the same fate – by embracing the digital world and moving stores and services online as the public had to spend more and more time at home. In the UK, online sales grew by 46% in 2020 compared to the previous year, which is the biggest increase since 2008.
Many new and ambitious business owners made the most of this new era of digitisation. By the end of 2020, US business formation applications were up 82% in the three months to September compared with the same period in the previous year. And in the UK, business incorporations were up 30% in the four weeks to mid-December, with the annual growth rate in double digits since June.
Many societal and economic changes caused by the pandemic look like they are here to stay – with history suggesting many of these shifts in behaviour will be permanent. The SARS crisis in 2003, for instance, is often credited with kick-starting the growth of major eCommerce platforms such as Alibaba.
What does this mean for financial service providers?
Due to the huge rise in businesses moving online, an incredible amount of data is now being produced by their platforms and payment systems. This has created new opportunities for financial service providers to be able to gain invaluable insights into performance, create powerful process automations, and enhance internal processes.
eCommerce, payments, and POS data is highly valuable because it is a unique and useful mine of information that can be used to paint a detailed picture of a business’s order history, income, inventory, and so much more. Financial service providers should incorporate this data into their existing systems and processes in order to gain a better understanding of their customers.
How commerce data can help
One huge benefit of commerce data is that it is so flexible, it can be used on its own or with other data, such as accounting and banking, to produce an array of valuable information about an SMB. Financial service providers can utilise this information to:
- Upgrade internal processes: Give decisioning and underwriting processes a boost with holistic views of an SMB’s past, present, and future performance
- Empower SMB automations: Help SMBs save valuable time by automating manual tasks such as bookkeeping, fulfilment, and inventory management
- Gain insights into SMBs: Gain invaluable insights into an SMB’s performance with granular sales information from across all sales channels
The true value of data
Utilising multiple data sources is the only way to truly understand the financial health of any business. Accounting software has undoubtedly become the central operating system for SMBs. As such, it is an incredibly rich and highly contextual source of information. When combined with direct-from-source bank data and up-to-date and useful commerce data, financial service providers can optimize and streamline internal processes with the help of technologies like AI. As a result, they can significantly improve performance and rapidly reduce costs. It can also be used to develop well-rounded customer profiles that can track trends, predict behaviours, and help financial service providers better understand and therefore serve their customers.
An industry-wide shift from siloed data to a connected ecosystem of unified financial data sources is already well under way. This ecosystem will consist of the next generation of products and services built using multiple data sources and it is important that financial service providers are early adopters of this movement, in order to reap as many benefits as possible.
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