RazorpayX: India-based SMEs lose money due to legacy systems

Tuesday 11 January 2022 14:43 CET | News

Business banking platform of the fintech giant Razorpay, RazorpayX, has commissioned an IDC Infobrief titled ‘SME Banking is Broken: Will India’s Promising Neobanks Fix it?’.

The infobrief delves into understanding challenges faced in managing financial operations, slow adoption of digital solutions, and its impact on MSMEs. The IDC Infobrief attempts to answer some pertinent questions around digital adoption by SMEs and what is stopping them from modernising their finance function. Furthermore, the study highlights the urgent need for SMEs to digitally transform their finance function, as the offerings of traditional banking organisations do not align with their evolving needs. Reiterating why business finance is the core of any enterprise, the study has focused on 6 key functions that businesses typically spend most of their time on - this includes Banking, Payroll, Vendor Management, Business Reporting, Expense Management, and Access to Working Capital.

The findings of the IDC Infobrief are based on the responses garnered from quantitative surveys of 20–25 minutes in length and in-depth research. 

Key insights from the IDC Infobrief highlighting existing business challenges: 

  • 1 in every 2 businesses agree that limited resources and lack of knowledge are the two major roadblocks to their digital transformation aspirations; 
  • The annual average loss from legacy systems dependence is INR 67 lakh (over USD 90k per SME, annually) which equals 1689 hours’ worth of man hours per SME, per year;
  • Over 45% SMEs fear there is a high chance of manual errors because of the dependence on traditional processes;
  • Over 56% SMEs reported that they wasted time from deploying resources for repetitive tasks; 
  • 44% SMEs complained spending significant time (an average of 1446 hours) on financial operations and repetitive tasks.

Having acknowledged the above-mentioned challenges, SMEs also realise they need a simple, seamless business banking solution that will allow them to focus on core business activities instead of being caught in complicated processes and repetitive tasks. Here are some key requirements from SMEs:

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

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Keywords: Razorpay, report, digital banking, SMEs
Categories: Banking & Fintech
Companies: Razorpay
Countries: India
This article is part of category

Banking & Fintech


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