Fintech powered by AI, big data, and machine learning will revolutionize financial services before they impact the automobile industry by producing driverless cars, Karen G. Mills, a Harvard Business School Senior Fellow and a member of the Obama cabinet predicted.
Large banks and promising fintech new entrants currently use these technologies to come up with solutions that will significantly benefit small firms, Mills said in an interview.
The 30-million small businesses in the U.S. are essential to the country’s economy. About half of the entire country’s workforce own or work for a small firm. Yet policymakers in Washington and economists often fail to give small firms the attention they deserve, even though they are crucial to job creation, economy, and communities, Mills added.
But because of a lack of financial support from the government and private lending organizations, the number of startups in the country decline from the average of 500,000 to 600,000 per year before the Great Recession in the late 2000s, the Harvard educator lamented.
Fintech firms recognized the issues in the SME lending market and worked on revolutionizing the customer experience for business owners, said Mills in her website about her newly released book, “Fintech, Small Business & the American Dream.”
With fintech, small business entrepreneurs have better access to funds through online lending. Once they go online, they can get their required capital by filling out an application form and determine whether they are eligible for a loan in minutes. Some fintech startups also transfer the money in the business owner’s bank account within the same day, unlike in traditional banks that can take months to get a loan.
Despite having some issues, such as high prices and hidden fees, online lenders are a big relief for startup entrepreneurs.
With the success of fintech startups, big banks like Bank of America, JP Morgan, and Wells Fargo started working on new solutions to streamline their online lending businesses. Big tech companies like Amazon, PayPal, and Square have also launched their lending units, making the future of the financial industry more exciting, Mills enthused.