The Challenges of Financial Technology and Innovation in the SME Industry

Abstract

This article examines the key challenges faced by Small and Medium Enterprises (SMEs) in adopting financial technology (FinTech) despite its growing importance in the modern business environment. FinTech offers SMEs significant benefits, including improved efficiency, lower transaction costs, better cash flow management, and wider market access. However, many SMEs struggle to fully utilise these technologies due to limited financial resources, lack of digital skills, cybersecurity and data protection risks, regulatory complexity, and inadequate digital infrastructure. Trust issues, cultural resistance to change, limited access to training, customer readiness, and system complexity further slow adoption. These challenges can negatively affect business decision-making, investment planning, and long-term competitiveness. The article highlights that successful FinTech adoption depends not only on technological availability but also on knowledge, confidence, and institutional support. It concludes that coordinated efforts from governments, FinTech providers, and SMEs through training, affordable solutions, clear regulations, and improved digital literacy are essential for SMEs to overcome these barriers and fully benefit from financial innovation in the future.