Date post: | 23-Jan-2018 |
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Alternative Data Transforming SME
FinanceGlobal Partnership for Financial Inclusion Forum
What data? A world awash in data – unprecedented volume, variety, and velocity – means more data can be SME credit data; and rapidly escalating processing power matches smart algorithms to massive data streams at plummeting costs
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Global shifts: how much data and where? The digital universe is more than doubling every two years; importantly, digital data will
switch from 60% in mature markets to 60% in emerging markets by 2020
Source: “The Digital Universe of Opportunities: Rich Data and the Increasing Value of the Internet of Things” (April 2014). IDC.
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Fintech transforming the SME lending status quoA rapidly growing crop of technology-focused SME lenders are putting customer needs, big data, and advanced analytics at the center of their business models.
P2P SME lenders Supply/trade financing Online balance sheet SME lenders
Online invoice financing
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Global SME ‘operating systems’ moving onlineEvery time SMEs use cloud-based services, make digital payments, browse the internet, use their mobile phones, engage in social media, buy or sell electronically, ship packages, and manage their receivables, payables, and recordkeeping online, they create and deepen the digital footprints they leave behind.
Payment acceptance + much more
Making payments Cloud accounting + much more
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Emerging digital SME lending ecosystem New analytic firms help lenders analyze big data; telco, bank, and technology firm convergence is fueling new mobile data-lending and financial services; and new marketplace aggregators help SMEs make sense
of their growing lending options.
Big data analytics Mobile data lending graduating to SMEs
SME loan aggregator marketplaces
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Fintech and banks 2016: more friend than foe
Advantage: banks• Captive, large customer base/ positive
selection in applicant mix
• Brand
• Distribution coverage
• Valuable, “free” internal data (but underutilized)
• Low cost, stable source of funds
• Regulatory certainty (mostly)
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Advantage: fintechs• Customer service oriented
• Simple and often friction-free applications
• More credit data sources
• Enhanced risk models
• Underwriting costs
• Pricing for risk
• Less regulation in many markets (but the future is uncertain)
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Scaling up: partnership business models
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Banks
SME Solutions
Online Lending
Government/Associations
Investing FCIF FUNDING CIRCLE SME INCOME FUND
Banks
SME Solutions
Online Lending
Payment/Processors
Lending as a service (LaaS)
• Focus on technology/embedded analytics a game changer
• Can scale very, very quickly
• Enables partners to expand core solutions /value added services
• U.S., Australia, Canada
Acquisitions + referral partners
• Acquired Lending Endurance Network to expand to U.S.
• Acquired rival Zencap to expand into Europe (Germany, Netherlands, Spain)
• Multiple referral partnerships
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Licensing the platform to scale globally
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Licensing technology to lenders globally
• Turnkey platform, fully configurable
• Rapid global deployment
• Rapid processing and decision making can be fully automated
• Works across all channels
Banks
SME Solutions
Platform LendingPartners
Network Acquirers
Institutional Partners
• Short online applications; automatically, painlessly link data sources
• Uses power of SME’s own real-time, verified business data to get working capital
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
Alternative data: policy issues and challenges
• Data privacy and consumer protection issues
• Opt-in vs opt-out models
• Credit reporting sharing and access
• Cyber security
• Transparency & disclosure
• Balancing integrity, innovation and marketplace competition
Global Partnership for Financial Inclusion Forum | 2 - 3 May 2017
http://smefinanceforum.org