![]() According to a World Bank report, the world’s micro, small, and medium-size enterprises have unmet finance needs of approximately $5.2 trillion a year, roughly 1.5 times the current lending market for such businesses.ĭespite the opportunities that lie ahead, banks often struggle to create the right lending solutions for their SME customers and to cut the cost of serving them. In this new credit cycle, SME lending will be not only one of the most economically important but also one of the most profitable contributors to banking revenues. The economic impact of the COVID-19 pandemic has ended the previous credit cycle and left businesses across the globe reeling. New trends and new opportunities in SME lending The emphasis on different levers depends on the specific situation. The operating model banks need to thrive in this market combines the right technology, new ways of working, and continuous performance monitoring-the components of proven recipes we have seen work for banks in the past. By using advanced analytics and purpose-built processes and infrastructure, banks can make decisions instantly and use risk-adjusted pricing to boot. For most banks, this starts by developing a strategy and a clear vision of product offerings and then rendering them for the targeted customers with a streamlined, robust experience. There is no one-size-fits-all approach to suit every bank and market, but banks that rethink their SME-lending businesses can increase their market share and promote profitable growth. ![]() This article is a collaborative effort by Juan Antonio Bahillo, Frank Gerhard, Abhimanyu Harlalka, András Havas, and Andreas Kremer.
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