Provenir Global Survey Reveals the Challenges Preventing Real-Time SME Loan Approval
Provenir – a leading provider of risk decisioning and analytics technology – conducted a survey with experts in the Fintech and banking industry focused on SMEs. The survey explored the challenges faced by financial institutions when offering loans to small and medium-sized companies. 179 industry leaders from around the world shared key insights into the problems that limit their ability to lend to SMEs. The study was focused on covering two main areas: approval speed and lending challenges.
While responses varied, the results overwhelming showed that real-time approvals for SME loans, whether for existing or new clients, are the exception and not the norm. This inability to approve loans quickly can be attributed to a number of factors, but respondents highlighted data integration as their biggest issue.
Of the industry leaders surveyed, 22% responded that approval for SME loan applications takes weeks, 39% said days, and only 8% reported that they could approve a loan in seconds. To support SME clients, lenders need to accelerate digitization and seek solutions to the road blocks that prevent them from delivering SME loan approvals in real-time.
Identifying and Overcoming Key Lending Challenges
There are many issues that can make it difficult for SME lenders to rapidly approve loan applications without sacrificing their risk tolerance. The challenges fall into three categories: access to data, technology usability, and internal resources. Out of all respondents surveyed, over 53% selected data access to either internal and/or external sources as a challenge that prevented improvements to SME lending processes. The second highest response rate was in the technology usability category, with the ability to operationalize risk models, make changes to processes, and reliance on vendors holding back innovation. The final category, human resources, saw the lowest response rate, only 13% selected challenges in this category, identifying the communication between data and engineering teams and/or a skills gap, as a significant challenge.
Overcoming these issues will require a focused effort where lenders concentrate on providing their team with the tools needed to simplify data integration and fully automate decisioning. By empowering teams to rapidly implement new risk strategies, lenders create an environment where employees can use their knowledge and creativity to build industry-leading user experiences. They can quickly put in place processes and advanced analytics tools that support real-time approvals without increasing risk appetite
Embracing Technology to Stay Competitive
With 2020 bringing with it a period of economic uncertainty and changing consumer behavior, SMEs need money cover running costs, diversify, and in some cases, expand. Having funding at exactly the right time is essential for success. But, unfortunately, SMEs face waiting days or even weeks to secure affordable funding.
Without solving the data integration problems as well as others identified in this survey, SME providers find it almost impossible to reduce approval times without increasing risk. Lenders need the ability to support SMEs with customized products and access to funds exactly when they need them. If financial institutions fail to provide competitive services, they risk losing both existing and new clients to innovative competitors.
That’s why empowering risk teams to easily access and use data and power real-time decisioning is essential for business growth and success. Platforms like Provenir, help financial institutions to simplify data integration, make changes quickly, and power real-time risk decisioning.