One of the biggest unresolved issues in global financial markets is the difficulty small and medium-sized enterprises (SMEs) typically have when it comes to accessing finance. Insufficient collateral, poor or non-existent credit histories and sometimes a lack of knowledge are just some of the reasons why traditional financial institutions are not catering for small businesses.
Now tech giants in the shape of e-commerce or digital payments platforms have started lending to SMEs. To do this they are using enormous amounts of proprietary data on their users to assess risk in new ways – something banks cannot do. Amazon or PayPal in the West and digital platforms such as China’s Alibaba already have lending arms that are targeting small businesses.
