The annual average loss from legacy systems dependence is ₹67 lakh (per SME, annually), according to an IDC Infobrief commissioned by RazorpayX.

The business banking platform of Razorpay, RazorpayX, commissioned an IDC Infobrief titled ‘SME Banking is Broken: Will India’s Promising Neobanks Fix it?’, which surveyed around 200 SMEs across India. The findings are based on the responses garnered from quantitative surveys of 20–25 minutes in length and in-depth research.

Major challenges

The report noted that 1 in every 2 businesses agree that limited resources and lack of knowledge are the two major roadblocks to their digital transformation aspirations. Over 45 per cent SMEs fear there is a high chance of manual errors because of the dependence on traditional processes. And, over 56 per cent reported that they wasted time from deploying resources for repetitive tasks; 44 per cent SMEs complained of spending significant time (an average of 1446 hours) on financial operations and repetitive tasks.

Further, the IDC infobrief added that 66 per cent SMEs insist on the need for easier access and faster means for loan approvals and verifications. 75 per cent SMEs wish for a reduction in time spent on data entry when it comes to payroll, 60 per cent SMEs want a unified view of financial transactions to check and improve visibility of overall business health and identify hiccups early on and 55 per cent SMEs prefer automated approval processes for better time management.

Inflection point

Shashank Kumar, Co-founder and CTO, Razorpay, said, “While the banking problems faced by small businesses are many, it’s good to know that some SMEs are slowly becoming aware of how neobanks can solve their broken banking experience. This IDC Infobrief commissioned by RazorpayX, our neobanking platform, attempts to bring to light the challenges faced by SMEs, the enormous time and money lost, due to dependence on traditional banking processes.”

He added that due to lack of awareness, small businesses aren’t able to take full advantage of the seamless, integrated banking experience that neobanks can offer in managing their business financing and banking needs.

Michael Yeo, Associate Research Director, IDC Asia/Pacific, said, “Neobanking is at an inflection point in India and has reshaped consumer expectations of what their bank can do for them. However, visibility on what they can do for businesses is yet to be discovered. SMEs in India are in dire need for solutions that can automate their end-to-end financial operations. Neobanks in India are now developing technology-first solutions specifically designed for SME needs in a dynamic and ever-changin g environment that has the potential to disrupt the incumbent business banking in the long run.”

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