How Is This Fintech Firm Tide Empowering Women-Led SMEs?

Resham Suhail May 04, 2022

How can fintechs help catalyse growth for women-led SMEs in India?

Bridging the financing gap through data: Most formal financial institutions need to assess credit history before lending, however Fintechs with their custom-built API-based platforms and AI/ML algorithms can access numerous alternative sources of data (GST, mobile data, social, statutory payments, quality lead scoring, litigations, etc.) and analyse them through thousands of data points, making credit underwriting and assessment robust and easier for lenders. Fintechs can step in to help in rapid calculation of their creditworthiness, and thus let them access hassle-free and quick credit options.

Foster Diversity: One on one, support can also be given to help people understand the basics of creating a business strategy or even something as crucial as filling a loan application form. These are small but important steps that can help women entrepreneurs tide through the most difficult teething phases of their businesses. Fintechs must offer these SMEs the solution to manage financial admin on one platform, and reduce their dependence on others, this will help SMEs save time and money on doing businesses and foster growth.

Accountancy and Financial Planning: By setting up in-house mentor panels, fintechs can help women-led small businesses learn how to forecast short-term cash flow, liquidity crunch, negative cash flow trends, and unplanned or unexpected expenses, all the way through to the basics of filing tax returns, GST, invoicing, managing payroll, etc. These services can be extended over

Marketing and Sales: Womenpreneurs should promote their own businesses through self-facing marketing campaigns, since no one knows their business better than them.

What are the challenges faced by women-led SMEs?

Financial gap: Most women-led businesses have to finance themselves or opt for informal credit options as banks and other financial institutions remain unsure of the business models and the potential or guaranteed returns on loans.

Lack of diversity: The 2020 MasterCard Index of Women Entrepreneurs states that more than 60 per cent of Indian women entrepreneurs rarely see opportunity, which brings us to the bitter truth that most financial institutions are averse to lending to women.

Lack of reliable data: As per a World Bank Report, women entrepreneurs in India face a rejection rate of 19 per cent by lending institutions in India – more than twice the rate of 8 per cent for men. While there are government and formal financial schemes for women-owned businesses, lack of awareness and outreach – especially in rural areas – has limited the impact.

Lack of support groups: While there are several good-intentioned govt-led programmes, their ground-level execution still needs a lot of work. With most business networks in India dominated by men, women business owners find themselves highly unsupported.

Where do the current programs for supporting the growth of women SMEs fall short?

As per experts, the finance gap for women-owned small businesses in India is $158 billion, as most women-led businesses have to finance themselves or opt for informal credit options as banks and other financial institutions remain unsure of the business models and the potential or guaranteed returns on loans.

One of the biggest barriers to financial institutions supporting women entrepreneurs is the lack of reliable data segregated by gender. As per a World Bank Report women entrepreneurs in India face a rejection rate of 19 percent by lending institutions in India – more than twice the rate of 8 percent for men. While the government and formal financial institutions have launched schemes to meet the specific business needs of women-owned businesses, a lack of awareness and outreach – especially in rural areas – has limited the impact. There is a need for regional assessments that provide granular insights into the trends around access of financial products for women entrepreneurs.

What are some of the initiatives being taken up by Tide to foster diversity in their customer base?

Fintechs should become incubators for women-led small businesses and undertake start-out services like business planning assistance, groundwork support, basic advisory services, creating awareness of government-led or institutional financial schemes, etc. through masterclasses, workshops and AMA sessions with experts. One on one, support can also be given to help people understand the basics of creating a business strategy or even something as crucial as filling a loan application form. These are small but important steps that can help women entrepreneurs tide through the most difficult teething phases of their businesses. Fintechs must offer these SMEs the solution to manage financial admin on one platform, and reduce their dependence on others, this will help SMEs save time and money on doing businesses and foster growth.

Can you please elaborate on the ‘Tide’s Women Entrepreneurs Mentorship Programme'. What will it entail and what will be its frequency?

Tide plans to work as an incubator for women business owners in India. Through this initiative, Tide aims to help women led SMEs start and grow their businesses. Under the 'Tide Women Entrepreneurs Mentorship Programme', the internal panel will feature in-house experts in Leadership, Marketing, Capital Investment, Hiring and Payroll, Taxation, and Legal, among others to provide one-on-one advice and host regular masterclasses, webinars, and AMA sessions for women entrepreneurs.

We believe this mentorship programme will not just prove instrumental in addressing their financial challenges but will also foster digital inclusion. The mentorship panel will also play an advisory role for women-led small businesses and support them with tracking progress and reporting issues. Select Tide employees who will be part of this mentor panel have been chosen based on the specific domain knowledge they possess. Going forward, Tide also plans to partner with external mentors, who have or are working in the MSME space, to play an advisory role in the programme.

This will be an ongoing programme, and will evolve as we scale up in India.

Providing business skills training is a basic step toward empowering women entrepreneurs, but to truly achieve transformative change, training programs need to address deeper psychological and social constraints facing women. How does Tide’s mentorship panel aim to cater to these constraints?

We at Tide feel that it’s fundamentally necessary for us to be diverse and inclusive in order to succeed. Firstly, to be able to serve the diverse needs of our small business members, we need to ensure that we leverage the diverse views of our employees. We can only achieve that if our employee population is representative of the businesses that we serve, including where it comes to our leadership, hence we at Tide have made a commitment to have 40% women in senior leadership by the end of 2023. By all accounts, female entrepreneurship is on the rise, with a larger and larger share of the small business market being started by women. In order for Tide to build the best products and services for these businesses, we need women leaders to be in the decision-room and that’s the best place to make a start.

We, at Tide, feel that it’s time for womenpreneurs to have that much-deserved spotlight shine on them, hence we celebrate entrepreneurship by making them our brand ambassadors across our marketing and advertising campaigns.