No branch? No problem. Technology brings banking to rural businesses
As urban and suburban population density continues to grow, it only makes sense that financial institutions would concentrate physical branches in these areas. But that leaves an important question to be answered. How do businesses that operate in rural locations receive critical banking services?
Fortunately, technology is making it easier for banks and credit unions to serve rural populations and expand into new business relationships.
Digital brings banking to rural areas
We’ve watched usage of digital channels explode over the last decade. Hailed for convenience and anytime, anywhere access, online and mobile is becoming the preferred way of banking for many consumers. However, in rural areas, digital is often the only way for businesses to bank.
Rural farmers across the U.S. heartland, for example, rely on mobile banking to stay connected with their financial institution and to perform critical banking services. That now includes everything from opening an account to making deposits, accepting payments, and paying vendors.
Digitization of the payments process has been particularly beneficial to rural businesses. Debit cards are now the most common form of payment in use today, according to the Diary of Consumer Payment Choice, and new digital applications provided through banking institutions allow rural businesses to accept debit and credit card payments in a no-hassle environment. Even check payments have been simplified with the introduction of remote deposit capture.
Paying vendors is just as easy for businesses thanks to technology. Bank-provided automated tools track receipt of invoices before automatically transferring funds once payment approval has been granted.
Cloud-based platforms are at the heart of many bank-driven initiatives to support businesses in rural locations. By using a cloud-based core platform, for example, banks have access to third-party providers and a wider range of services they can offer to businesses. Many of these services can also be tacked onto existing cores, providing the financial institution with additional functionality for rural businesses.
Reaching the far-flung corners of the world
In developing countries, digital services are playing a major role in the growth of local economies. Tanzania and Kenya are two such locations.
I recently visited community-based financial institutions throughout these areas and heard first-hand from banking leaders about small business challenges. Due to the distance between physical branches and these rural communities, access to credit has been a major hurdle for small business owners, such as seamstresses, taxi drivers and small farmers.
It was a revelation to me to talk with these financial institutions and learn how digital access to credit through mobile phone devices had opened doors to small businesses in the region, allowing them to grow and expand employment opportunities to community residents.
While rural businesses may not have ready access to a physical branch, digital services can bring banking right to the business’ doorstep—or better yet—the palm of a hand. What a nice feeling it is to learn how Finastra developments are positively impacting the lives of people who live in remote areas like these.
Discover more in the Redefining Finance series