Fintech and SME Finance : Expanding Responsible Access
This technical note is structured in the following manner. Section two provides an overview of the main barriers and frictions that SMEs face to access finance. Section three explores how digitization is an enabler for SME finance and how different fintech solutions address these barriers. The fintech solutions analyzed include digital credit, asset-based lending, and equity products. Also examined are innovative products such as digital payments, credit risk assessment using alternative data, tokenized assets, and electronic invoicing. Market enablers such as e-commerce and open banking, and the digitization of business processes, which contribute to addressing the barriers and frictions to SME access to finance, are also highlighted. Section four analyzes how the providers of these fintech solutions for SMEs impact traditional banks, financial institutions, and implications on the financial market structure. This section also discusses the effects of the COVID-19 pandemic on the use of digital financial products for SMEs. Section five then addresses some of the key risks and challenges involved in the adoption of digital financial products and key market enablers. Finally, section six presents policy and regulatory recommendations to address the different challenges.
| Main Authors: | , |
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| Format: | Technical Note biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | SME ACCESS TO FINANCE, FINTECH DIGITAL CREDIT, FINTECH ASSET-BASED LENDING, FINTECH EQUITY PRODUCTS, TOKENIZED ASSETS, COVID-19 AND DIGITAL FINANCE, SMALL AND MEDIUM ENTERPRISE, DIGITAL FINANCE, FINTECH REGULATORY RECOMMENDATIONS, |
| Online Access: | http://documents.worldbank.org/curated/en/099735004212257410/P17300606103440d8083ca064c26ca7f8dc http://hdl.handle.net/10986/37355 |
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| Summary: | This technical note is structured in
the following manner. Section two provides an overview of
the main barriers and frictions that SMEs face to access
finance. Section three explores how digitization is an
enabler for SME finance and how different fintech solutions
address these barriers. The fintech solutions analyzed
include digital credit, asset-based lending, and equity
products. Also examined are innovative products such as
digital payments, credit risk assessment using alternative
data, tokenized assets, and electronic invoicing. Market
enablers such as e-commerce and open banking, and the
digitization of business processes, which contribute to
addressing the barriers and frictions to SME access to
finance, are also highlighted. Section four analyzes how the
providers of these fintech solutions for SMEs impact
traditional banks, financial institutions, and implications
on the financial market structure. This section also
discusses the effects of the COVID-19 pandemic on the use of
digital financial products for SMEs. Section five then
addresses some of the key risks and challenges involved in
the adoption of digital financial products and key market
enablers. Finally, section six presents policy and
regulatory recommendations to address the different challenges. |
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