The pandemic of COVID-19 led to a significant reshaping of how businesses operated. With lockdowns implemented globally, it became increasingly challenging to manage businesses traditionally; a more robust approach had to be adopted. Failure to adapt to this led to numerous companies coming to an end.
Hence it became imperative for companies to cut costs and change their procurement practices for the sake of business continuity. While most companies faced challenges adapting to the harsh external global conditions, many thrived by implementing different strategies in their processes.
When it comes to Fintech Industry, from 33% in 2017, 64% of customers globally now use one or more fintech platforms. Moreover, by 2025, the value of the worldwide FinTech industry is predicted to be over $305 billion. Let’s look at how strategic sourcing, specifically, has impacted the Fintech Industry.
Strategic Sourcing and Its Impact on Fintech Industry
Strategic sourcing is an approach to business that helps the company save costs by aligning a business’s goals and objectives with its sourcing activities. It is a more holistic approach to sourcing that allows companies to adopt the best possible policies for their supply chain and remain competitive in their industries.
Given the drastic change in operations that were brought about by the pandemic, it became crucial for companies to adopt a more robust approach. This is where strategic sourcing comes into play. It helps fintech companies identify and source solutions for IT infrastructure, digital communication between teams (such as video conferencing and voice calls), and, last but not least, employing cybersecurity measures that ensure that company data remains secure even when accessed outside the physical location of their offices.
Improved Alignment and Impact on Business Continuity
Using strategic sourcing, fintech companies can automate many of their routine tasks, which helps them maintain business continuity and remain competitive in their industry. During the pandemic, when employee morale was low, these technological changes helped keep operations running smoothly, even more, efficiently in some cases, and reduced business disruptions.
The fintech industry faces several risks that can hinder its operations and potentially disrupt them. The significant hazards include data security, market conditions, and professional and personal liabilities. However, by the use of strategic sourcing, these risks can be mitigated.
By identifying the areas of a data breach, fintech companies can preemptively predict any violations that might occur and have a solution ready to reduce these breaches. Covid-19 is an excellent condition of how an external market condition can disrupt your day-to-day business.
However, technological sourcing can help adapt to these conditions where fintech companies can continue to operate despite market disruptions. Being a financial organization would naturally come with a risk of liability. Yet, adopting customer risk assessments can help in limiting the risk of default as it can help identify the likelihood that customers would default on their payments.
Fintech companies do not have a pervasive supply chain network compared to other companies. However, when the pandemic hit, fintech companies were severely affected. They were forced to align their procurement strategy with the rising challenges in a post-Covid world.
Impact on Cost Savings
Cutting costs has always been an important area for any business. However, with the occurrence of the pandemic, it became the only way of survival. An automated procurement function with a robust sourcing function is imperative for fintech companies to cut costs. Automated procurement not only increases the efficiency of the processes but also allows the origination to identify which processes are not required and stop all non-essential spending.
Furthermore, it allows for greater visibility for fintech companies to analyze the effectiveness of the processes and focus on areas within the operations where consolidating vendor relationships might result in higher savings. By relying on the holistic view of strategic sourcing, fintech companies can increase cost-cutting and enjoy having more working capital to work with, which is essential in difficult external conditions.
Long-term Relationships with Suppliers
The insights from strategic sourcing helped fintech companies align with suppliers that could better service them according to their new strategy and establish mutually beneficial pricing agreements that would also help them remain cost-efficient and competitive.
Strategic sourcing not only helps fintech companies in improving operations and cutting costs, but it also helps in building a good relationship with suppliers. Analyzing the company goals makes it relatively more straightforward for fintech companies to identify which suppliers they should use for their procurement needs.
Helps Align Supplier Engagement with the Goals of the Organization
Furthermore, consistently evaluating the organization’s objectives makes it easier for your suppliers to provide you with the services you require alongside you. This helps create a synergy between your organization and your supply chain, ultimately promoting a good, mutually beneficial relationship.
Read More Fintech Analysis: Counterpart Launches AI-Powered Crime Coverage For Small Businesses Backed by Aspen Insurance
Strategic sourcing differs from failure to adapt and thrive in challenging conditions. By analyzing the total cost of your supply chain and optimizing the sourcing process, fintech companies can cement their standing within the industry and face any challenges head-on.