Digitally Combating Shadow Economies

In today’s pandemic-stricken world there has been a significant increase in the use of digital channels for e-commerce, by some estimates as much as 20% Quarter-on-Quarter. This has benefited large digital e-commerce organizations but has adversely impacted the small & medium enterprises (SME’s) who have been dependent on traditional distribution channels (e.g., shops).

One of our premium financial clients was looking for a way to help Corporates and SMEs compete in the new world, that is, to help sustain these smaller businesses and enable them to adopt a new business model based on digital channels. 

A key problem for the SMEs has been the access to capital (i.e., firms have faced liquidity challenges due to lack of business via conventional channels). This has been compounded by access to products and services through the usual distribution channels to sell to their customers (i.e., not only challenge selling but also sourcing of goods and services).

To address this challenge, our client was looking for a technology-based solution:

1. In which Corporates could efficiently provide credit facilities based on cash flows to support the SMEs (i.e., to provide SMEs with capital to run their business).
2. To support SME’s in gaining access to digital channels for sourcing and distribution (i.e., digital shopfront).

Achieving this enables banks and corporates to support the economy by helping viable SMEs and the manufactures survive and flourish (i.e. socio-economic benefactors).

It also creates an infrastructure enabled ecosystem that enables manufacturers to work directly with the SME’s and vice-versa; it gives the SME’s the ability to drive growth as it provides unfettered access to a wider customer base; and last but not least, it provides more options for the consumers.

Therefore, the need of the hour was to help put in place an infrastructure that firstly enables corporates to efficiently validate the identity and financial stability of the SMEs through the banking network (i.e. the Bank Holder and transaction information would be certified by a Financial Services organization establishing a factor of TRUST between the corporate and the SME); and secondly, to build out the new digital channels that would drive sales growth for the SMEs.

The success of this initiative:

• Helps the SME’s sustain and generate more opportunities
• Enables the availability of capital and enhanced/ expanded market reach to SME’s
• Helps the consumers have trust on the SME they are buying products & services (i.e. as SMEs vetted by financial organization).

The solution to support this provides an infrastructure of TRUST built on the financial data aggregation capabilities which are augmented by digital e-commerce and marketing tools that enable the SMEs to access customers through secure digital channels.

Follow-on services include:

• Enrolling the SME’s on digital business directories to help give them a digital identity
• Enrolling them into the Banking system
• Enabling them with E-Commerce and digital payments capabilities