Governments around the world are unveiling comprehensive strategies for re-opening various sectors of their economy- taking great care in balancing the overall well-being of their citizens with minimal economic damage. The Ontario government, for example, has outlined a roadmap for re-opening with three phases: A) Protect and Support; B) Restart; and C) Recover- and while no specific dates have been given as of yet, already certain businesses have been allowed to open- such as construction, golf courses and outdoor recreation; vehicle dealerships; and some retail stores which offer curbside pickup.
As businesses re-open, fintechs will have a larger than ever role to play, as World Economic Forum states in their article: (https://www.weforum.org/agenda/2020/05/fintech-can-help-smes-recover-covid-19
). As the article states, traditional banking models have been a long existing barrier to SMEs in accessing the financing they need to grow and flourish. Utilizing new fintech-based approaches can allow these SMEs easier access to financial capital and drive the economy’s recovery once Coronavirus has passed.
Even before Covid-19 was a factor, fewer than 15% of SMEs in major industrial economies were able to access the credit they needed to grow; in turn driving down wealth and job creation and constraining economies. The International Finance Corporation (IFC) pegs the gap in SME unmet financing at a mind-blowing $5.2 trillion annually; and predicts that the gap will continue to significantly expand post-pandemic.
Fintechs- if allowed to- can be the engine driving post-COVID economic growth and recovery; utilizing their new lending model that is more cost-effective and more transparent; plus is much faster in getting capital to businesses. One of the main reasons they are able to function within much shorter time frames is their advanced computer modeling and analytics systems they utilize. Fintechs are able to assess data- from something as simple as a bank statement- to establish a business' risks and creditworthiness- and other key factors- in order to issue loans in as little as 24 hours! Rather than waiting several days or even weeks to hear back from a traditional bank, these new and highly innovative digital systems are better positioned to serve the financing needs of SMEs- and ultimately lead them out of the red and into financial recovery.
Partnerships which provide for the exchange of such data are the future for digital lending- as it is in the best interests of all parties involved in finance to get on board and utilize this data collectively. These emerging partnerships- working in tandem with government stimulus packages- can help to offset the financial harm caused by Coronavirus; and as SME demand for loans are already increasing with no end in sight- this offers some hope to businesses who feel like they are constantly left behind by traditional banks.