According to IFC and McKinsey & Company, SMEs contribute to more than 50% of global GDP and provide almost two thirds of global employment. They are backbones in all countries’ economic development, and play an essential role in job creation.
Traditional banks usually require collaterals when lending to SMEs because of the complexity of business, lack of information and high intrinsic risks. Even worse, banks may reduce the credit exposure to SMEs when economy is going down. SMEs are still facing difficulties to access affordable finance.
With the recent innovation of Fintech, new opportunities have emerged to bridge the gap of SMEs financing. Applications based on distributed ledger technology (“DLT”), like blockchain, make it possible to build an efficient and synergic lending process. China Securities Credit Investment is building a flexible infrastructure based on DLT, which could be adapted on various cases for all players throughout the supply chain, like anchor companies, supplies, warehouses and logistic service providers, and funding sources, to connect themselves to the network and to authorize respective parties to acquire transaction information to complete credit assessment, funding and repayment processes.
With the development of Fintech, traditional financial institutions are more open to embrace technology, by applying internet technology to reduce information asymmetry with lower cost and higher efficiency, to serve more and more “long tail” users.