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How Commercial Finance Has Adapted to a Changing Society

Estimated Read Time: 5 Minutes

Sean Owusu , 12 October, 2023

Commercial finance is essentially the fuel that powers businesses, large and small. It’s the loans, the investments, the risk-assessments and all that jazz. But let’s face it, society isn’t what it used to be. From the tech we can’t live without to new attitudes about what makes a business worth our time and money, change is in the air. So, the big question is, how has commercial finance adapted to keep pace with these shifts? 

Spoiler alert: it’s not just about digital bank accounts or blockchain buzzwords. It’s about a holistic transformation shaped by technology, societal demands, and even global events. Intrigued? You should be. Let’s dive in and explore how commercial finance is staying ahead of the curve, making life easier for businesses and maybe, just maybe, for you too. 

A Tale about Traditional Commercial Finance 

A Walk Down Memory Lane 

Let’s take a stroll down memory lane, shall we? Picture this: It’s the early 20th century. If you were a business owner in need of some cash, your options were pretty limited. Forget about hopping onto an app and securing a loan within minutes; you’d need to put on your best suit and head down to the local bank. 

The Bank—Your One-Stop-Shop 

Back in the day, the bank was your go-to place for anything money-related. Need a loan? To the bank. Want to save up? Open a savings account at—you guessed it—the bank. It was a system that had worked for ages. You’d present your case, fill out mountains of paperwork, and if you were deemed ‘worthy,’ you’d get that loan or investment. 

But Wait, There’s a Catch 

However, the traditional system had its drawbacks. First off, it was slow. I mean, snail-paced slow. Loans could take weeks or even months to get approved. Secondly, it was restricted. Banks typically favoured established businesses over newcomers. And let’s not forget, this old-school method required a lot of in-person meetings, signatures, and bureaucratic red tape. 

The Problem with Limitations 

The limitations of traditional commercial finance systems were not just inconveniences; they often acted as barriers for small businesses and startups. If you weren’t part of the in-crowd or didn’t have a long-standing relationship with your bank, getting finance was an uphill battle. Plus, the concept of “ethical finance” was barely a blip on anyone’s radar. 

Alright, enough about the past. Why dwell there when the present is so much more exciting? But understanding where we’ve come from sets the stage for appreciating the leaps and bounds that commercial finance has made. Are you ready to see how far we’ve come? Let’s fast-forward to today and take a look at what’s shaking up the commercial finance world as we know it. 

A World in Flux 

Let’s face it, the world isn’t static. From the smartphones in our pockets to how we view the role of businesses in society, things are constantly evolving. So, how could commercial finance possibly stay the same? Spoiler: it can’t and it hasn’t. 

Technological Advancements 

Remember when you had to go into the bank to check your balance? Yeah, me neither. Technology is the big game-changer here, folks. Online banking, mobile apps, and instant loan approvals are just the tip of the iceberg. But it’s not just about making things faster and easier. Technology has fundamentally changed the way we think about money and manage it. 

Changing Consumer Behaviours 

Who knew that millennials and Gen Z would be financial trendsetters? These generations aren’t just about avocado toast and TikTok dances. They’re driving the demand for transparent, ethical, and—let’s be real—convenient financial services. From wanting to know where their money is being invested to expecting instant loan approvals, the finance landscape is shifting to meet these new expectations. 

The Global Stage 

Remember when businesses were local and most financial transactions happened face-to-face? Well, globalisation has thrown that model out the window. Companies now operate on a global scale, and financial systems have had to adapt to keep pace. Whether it’s multi-currency accounts or cross-border investments, commercial finance is no longer confined by geography. 

All Eyes on Ethics 

Let’s talk about ethics for a sec. With issues like climate change and social justice taking centre stage, there’s a growing demand for ethical financial practices. And yes, this extends to commercial finance. It’s not just about making a quick buck anymore; it’s about making responsible choices that have a positive impact. 

The New Age of Commercial Finance

Stepping into the Digital Age: Online Banking and Platforms 

So here’s where the magic happens. Remember the time-consuming, paper-heavy processes of traditional banks? Those are becoming as obsolete as flip phones. Now you can manage business accounts, apply for loans, and handle investments, all while sitting in your pyjamas. These digital platforms have made finance more accessible and, dare I say, somewhat enjoyable. Plus, they’re faster than ordering a takeaway coffee. How cool is that? 

Not Just a One-Man Show: Peer-to-Peer Lending and Crowdfunding 

You know the saying, “It takes a village?” Well, that applies to commercial finance now too. Peer-to-peer lending and crowdfunding are stepping up as alternative funding routes, especially for small businesses and startups. No longer are you solely reliant on a stern-faced banker to approve your loan. Instead, you could have a whole community of people investing in your vision. Not too shabby, eh? 

The Smart Factor: AI and Big Data 

Artificial Intelligence and Big Data are like the backstage crew in a theatre production—doing a lot of the heavy lifting without taking a bow. They help financial institutions make smarter decisions, faster. And it’s not just about automating tasks; it’s about personalised experiences. Think targeted advice and customised investment options. It’s like having a personal finance guru, but one that works around the clock. 

Let’s Talk About Security: Enhanced Safety Measures 

In this age of cyber threats and online fraud, security can’t be an afterthought. Thankfully, modern commercial finance platforms take this seriously. From multi-factor authentication to advanced encryption methods, your money is guarded like a treasure in a high-tech vault. In our case, we use Onfido for verification, which includes ID and photo verification – Measures are both secure and easy to complete! 

See how far we’ve come? Gone are the days of tedious procedures, limited options, and one-size-fits-all services. The commercial finance sector has pulled up its socks, tuned into what society wants, and unleashed a host of innovations to meet those demands. 

Now, you might be wondering, “This all sounds great, but are there any downsides?” Ah, I thought you might ask that. So, how about we explore some of the challenges and considerations next? 

Navigating Regulatory and Ethical Waters 

When Freedom Meets Responsibility 

So far, we’ve talked about all the fantastic innovations in commercial finance, which can almost make it seem like a Wild West of endless possibilities. But let’s not forget: with great power comes great responsibility. Enter the regulators and ethical guidelines—our trusty sheriffs in this ever-changing landscape. 

The Alphabet Soup of Regulations 

GDPR, FCA, KYC—acronyms that might make your head spin, but they’re crucial. The government and international bodies have set up various regulations to make sure everyone’s playing fair. So, whether it’s about data protection or ethical lending practices, the rules of the game are continually being updated. 

The Green and the Good: ESG Takes Centre Stage 

Environmental, Social, and Governance (ESG) is a cornerstone of modern commercial finance. Businesses and investors alike are increasingly looking at these criteria when making decisions. So, if you’re still not considering the environmental impact or social ethics of your commercial financial activities, you’re missing a significant piece of the puzzle. 

Not Just Black and White: The Ethical Grey Areas 

While we all aim for a utopian world of ethical finance, there are still some grey areas to navigate. For example, what might be an acceptable investment opportunity for one person could be an ethical no-go for another. And then there’s the challenge of balancing profitability with ethical considerations. Tricky, isn’t it? 

Transparency: The New Gold Standard 

One way to handle these challenges? Transparency. Be it through openly discussing how decisions are made or providing customers with more information about investment opportunities, clear and transparent practices are becoming the norm, not the exception. 

Hold onto your hats because navigating the regulatory and ethical landscape isn’t always smooth sailing. But it’s this exact journey that ensures commercial finance doesn’t just evolve in a vacuum; it adapts in a way that aligns with our broader goals and values as a society. 

Final Thoughts 

The More Things Change, the More They Stay the Same? 

In some ways, the basics of commercial finance haven’t changed that much—it’s still about providing businesses with the resources they need to operate and grow. But the how of it all, well, that’s where the revolution lies. 

Adapt or Get Left Behind 

The most significant lesson here is the need for adaptability. Any business, big or small, must adapt to the ever-changing circumstances in our world. Whether it’s shifting consumer behaviour, new technological advancements, or the ever-evolving regulatory landscape, change is the only constant. 

The Power of Choice 

One exciting aspect of all these changes is the expanded range of options available to businesses and consumers alike. You’re no longer limited to what your local bank can offer. This democratization of finance is, quite frankly, a game-changer. 

A Sense of Responsibility 

With great power (and options) comes great responsibility. It’s on all of us—consumers, businesses, and financial institutions—to ensure that we’re navigating this new landscape responsibly and ethically. 

Your Role in the New Financial Era 

Why should you care about all this? Because these changes don’t just affect big corporations or the finance wizards on Wall Street. They impact all of us. Whether you’re running a small business, investing for your future, or simply managing your daily finances, you’re part of this evolving landscape. 

So, let’s embrace the changes, celebrate the innovations, and, of course, keep a watchful eye on the ethical and practical implications of this new frontier. After all, this isn’t just the story of commercial finance adapting to society; it’s the story of how we’re all adapting to a new world. 

Feeling enlightened? I hope so. Because whether you’re an entrepreneur, a finance newbie, or just someone who likes to stay in the loop, understanding the evolution of commercial finance can help you navigate your own financial journey. If your business is craving some extra capital, why not take a look at our extensive range of financial solutions, each fine-tuned to suit your specific needs. 

BY Sean Owusu




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