As we move into 2022 and the fintech industry continues to grow, we see several trends that will help drive lending and disrupt the small and medium-sized enterprise (SME) lending market. The latest AI and data analytics technology lie at the heart of these trends.
Here are our top predicted trends for 2022:
- Credit scores for the small guy.
The traditional lender, such as a bank, has access to a number of data points when it comes to lending criteria. Liquidity, credit scores and even tax history all fall under the microscope. For small businesses, start-ups, and micro businesses, this can cause a real headache. However, new entrants offer non-traditional lending options, such as supplier finance, so the historical credit score methodology falls by the wayside. The focus shifts from the supplier to the buyer, helping unlock capital. Powering this is AI integration and big data analytics to expedite applications.
- AI advances will mean faster processing.
There is no doubt that technological advances are not just speeding up how lenders assess credit but are also speeding up the process of accessing that finance. Applications can be processed in minutes, not days, which is a stark contrast to traditional lenders. For businesses in the value chain, this means getting access to capital exactly when they need it. AI contributes to a streamlined financial decision-making process working for the benefit of buyer and seller, lender and borrower.
- Fintechs are eyeing up the traditional banking model.
Over the past few years, the fintech lending space has dramatically evolved, and many new entrants have moved to replace the traditional bank. As new entrants gain licenses, they can optimise the lending experience by deploying innovative technology.
What does this mean to SMEs? It means quicker access to credit, quicker processing times, and less onerous underwriting. Furthermore, having new options available, businesses now have flexibility, which can mean the difference between success and failure. As we enter 2022, it is an exciting time for fintechs. Not only are we seeing the wholescale disruption of the historic lending sector, but we are also seeing the introduction of alternative, tech-driven solutions, which in turn will enable more business owners to build and scale.