The future of payments: How AI is redefining agility for SMBs

Asia Pacific is a hotbed of innovation, and home to agile SMBs driving digital transformation, creating waves that will transform finance. According to IDC, a third of SMBs in the region intend to invest more in automation and digital tools to boost productivity, reduce manual processes, and overcome worker shortages by 2026.¹

Numerous innovative and agile SMBs have emerged to reshape the region’s business landscape. Companies like Dowsure, Doxa Holdings, and Open Financial Technologies are just some SMBs leading the transformation, providing tailored financial services that simplify processes, enhance cash flow management, and ultimately empower merchants to thrive in a competitive marketplace. 

Broadening access to capital for e-commerce merchants

While cross-border business presents an opportunity for growth, e-commerce merchants often struggle with insufficient capital to manage their operations effectively. Traditional financing methods can be slow and cumbersome, making it difficult for merchants to secure necessary funds quickly. The delay in settlement, typically taking three months from goods procurement to receiving payment, creates a significant liquidity gap.²

Dowsure, a China-based fintech, offers various services to facilitate cross-border sellers' financial transactions. The fintech uses a proprietary risk control model and a dual account locking system to secure loan repayments and mitigate risks. The company utilises a data sandbox for efficient data transfer between e-commerce platforms and banks, allowing for real-time monitoring of loans and seller performance.

The company's model allows sellers to receive loans based on their sales data, thereby addressing the challenges posed by traditional banking methods that often overlook these businesses due to a lack of collateral. So far, Dowsure has served over 20,000 sellers, helping them secure financing that has led to sales exceeding RMB45 billion (approximately USD6.3 billion).³ Partnering with Visa in 2023, the company issued its first credit card using a data-driven underwriting model.⁴This further simplifies the financing process for merchants, allowing them to gain immediate access to credit through the newly issued credit card.

Accelerating payments and financing for the construction industry

Traditional processes in payments and financing also plague industries like construction and real estate across the region. The construction industry, for instance, often relies on cumbersome manual processes, including paper-based invoicing and multiple handoffs of documentation. As a result, contractors frequently face delayed payments, which can stretch from 35 to 100 days, causing cash flow issues.⁵ Moreover, multiple platforms for procurement, payment, and financing can lead to disjointed operations and high costs.

To deal with these issues, Doxa Holdings, a Singapore-based fintech, leverages embedded finance to provide a procurement-to-payment solution, Doxa Connex. Built for construction and real estate, the platform manages procurement, payment, and financing operations all in one place, enhancing efficiency and reducing administrative costs. This integration allows users to manage their entire supply chain financing without needing to leave the platform, enhancing the user experience.

Via Doxa Connex, subcontractors can receive payments via virtual cards as soon as their work claims are certified, often ahead of the invoice due dates, ensuring steadier cash flow.⁶ By automating procurement and payment processes, the platform also helps construction companies reduce administrative fees and processing costs by at least 50 per cent.⁷ In addition, construction firms also have credible data and a clear audit trail for transactions, allowing them to gain the confidence of financial institutions during the financing process. 

Streamlining financial services and product development for India’s SMBs

In India, conventional banking systems often involve inefficient processes for managing multiple accounts, payments, and financial records. Due to this, many SMBs struggle with the complexity and time required to handle financial tasks, especially when they lack the manpower and resources. Furthermore, SMBs struggle with keeping costs low. They frequently encounter high transaction costs from banks and other expenses such as developing new products to launch. 

In the face of these challenges, Open Financial Technologies (Open) from India provides a banking platform that integrates banking, payments, accounting, and expense management. This consolidation allows SMBs to manage their finances more efficiently, reducing the time spent on administrative tasks. SMBs save at least two hours a day, which can be redirected towards growing their businesses.⁸

Open has also accelerated the business growth of SMBs while maintaining cost efficiency, especially with its Zwitch solution. The no-code finance platform allows SMBs to embed financial services into their existing offerings quickly. Now, SMBs can develop financial products in a matter of weeks, instead of taking 18-24 months via traditional methods.⁹ Furthermore, SMBs reduce their expenditure with the platforms’ no-code and low-code tools, saving up to 10 times the costs typically associated with developing financial products.¹⁰

Moreover, Generative AI empowers SMBs to harness predictive analytics for data-driven insights, enabling them to forecast future financial scenarios and plan effectively for various contingencies. This proactive approach to financial management not only enhances decision-making but also positions businesses to capture emerging opportunities. To unlock Generative AI’s potential in financial management, Visa has invested USD100 million to support companies that develop AI solutions for commerce and payments.⁴ This significant investment will drive Generative AI innovation aimed at equipping SMBs with innovative tools to navigate uncertainties and thrive in Asia Pacific.

As the development of Generative AI technology accelerates, it is increasingly important for SMBs to embrace these innovations, particularly in the realm of payments. SMBs should proactively identify areas for improvement within their current payment processing, consumer engagement, and financial management processes. By thoroughly assessing these areas and pinpointing existing gaps, SMBs can gain a clearer understanding of how Generative AI applications can be effectively deployed. With these insights, they can seek out the right partners in the ecosystem, such as financial institutions and payment networks, to leverage Generative AI payment solutions to close these gaps. 

This strategic approach will enable SMBs to build more agile and efficient payment systems, ultimately fostering greater growth and positioning them for long-term success in the dynamic business landscape.

¹ ncnonline, Top Predictions for Small and Medium-sized and Digital Native Businesses in Asia/Pacific* for 2023 Onwards, 2023

² PR Newswire Asia, Cross-border E-commerce Finance in the Fast Track: Dowsure reached 1.5 Billion RMB Transactions Milestone, 2022.

³ PR Newswire, Dowsure Signs Multi-Million-dollar Asset-Backed Loan with HSBC, 2023.

⁴ Visa, Visa's Accelerator Program 2023 Cohort Showcases Transformative Solutions in Digital Payments, 2023.

⁵ Visa, Visa, UOB and Doxa transform payment processes for the construction industry, 2023.

⁶ Visa, Visa, UOB and Doxa transform payment processes for the construction industry, 2023.

⁷ Doxa Holdings, DBS, Doxa launch automated supplier payments solution for construction sector, 2023.

⁸ Observer Research Foundation, Open Financial Technologies: Asia’s first neo-banking platform for SMBs and startups, 2020.

⁹ SBM Bank India, SBM Bank India has announced a strategic partnership with Asia’s first end-to-end Embedded Finance platform, "Zwitch", 2022.

¹⁰ SBM Bank India, SBM Bank India has announced a strategic partnership with Asia’s first end-to-end Embedded Finance platform, "Zwitch", 2022.